Hamas Rocket Hits The Short Wall Of The Rial

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Hamas Rocket Hits The Short Wall Of The Rial

Hamas rocket hits the short wall of the rial

The Hamas rocket attack on the short wall of the rial, known as Operation Storm of Al-Aqsa, has not only affected Israel and its security and economic infrastructure, but also impacted the livelihood of Iranian citizens. The dollar exchange rate has returned to the 50,000 toman channel, and there is evidence of another imminent surge in the currency’s price.

When the Al-Qassam Brigades of Hamas fired the first rockets towards the occupied territories, an explosion occurred not in Israeli soil, but in Tehran’s Mirdamad Street and the Central Bank of Iran. The value of the rial increased by about 10% within the initial 6 hours of the operation, and the wall built by the government and the Central Bank in front of the dollar suddenly collapsed.

Although in the following days, with the positions taken by the Supreme Leader of the Islamic Republic, this surge was somewhat compensated and the dollar price experienced a 4 to 5% retreat, the situation progressed in a way that the price stabilized in the 50,000 toman channel. Now, experts believe that the equations in the foreign exchange market have been written in a way that we will witness significant growth in the dollar rate in the winter of 2023, which will affect all markets.

However, Iran Gate had previously reported on the occurrence of such an event in September and had warned that Farzin’s defensive dam and his team were vulnerable to the artificial rise in the dollar’s price and would soon collapse. However, this report examines the exchange rate in the coming days and weeks in more detail.

Price explosion on Mirdamad Street

To better understand the value of the rial in the days and weeks after the Gaza war, we can refer to the chart below. As seen in the image, the dollar rate remained stable in the 49,000-toman price channel from the beginning of October 2023 until the middle of the month. However, with the start of the Gaza war on October 6, 2023, we suddenly witnessed a price increase and the breaking of the 50,000-toman barrier for the dollar price. Therefore, it can be clearly stated that the exchange rate has been completely influenced by regional developments.

The collapsed wall

Since Mohammad Reza Farzin became the head of the Central Bank, extensive efforts have been made to suppress the exchange rate. This policy has led to the stability of the dollar rate at around 48,000 to 50,000 Iranian rials over the past 8 months. However, experts believe that the Gaza war has caused this price barrier in the foreign exchange market to be broken. Therefore, many financial market participants believe that now that this barrier has been broken, the dollar can move towards its real value in the free market.

What is the real price of the dollar?

There is a specific formula used by market participants to calculate the real exchange rate of the dollar. To calculate this rate, one can multiply the price of 49,000 Iranian rials by the annual inflation rate in Iran in 1401 and subtract the inflation rate in the United States during the same period. The resulting figure represents the depreciation of the Iranian currency over the next year. Therefore, with the consideration of the inflation rates in Iran and the United States, it is expected that by the end of the current year, each US dollar will be equivalent to 70,000 to 75,000 Iranian rials.

However, this does not necessarily mean that the exact price of the dollar will be in the range of 70,000 tomans until the end of this year. In fact, it can mean that if the central bank fails to create the same defensive barrier, the price should reach this range. It is said that the Gaza war has fundamentally broken Farzin’s defensive barrier against the exchange rate, so it is expected that the price of the dollar will rise to the range of 70,000 to 75,000 tomans by the end of this year, which is much higher than a month ago and before the start of the Gaza war.

However, over the past month, we have seen fluctuations in the exchange rate, including during speeches by Ayatollah Khamenei and Sayyed Hassan Nasrallah, which is clearly visible in the chart above. For this reason, some government supporters claim that by reducing the intensity of the war, the price of the dollar will return to below 50,000 tomans. But this is where they refer to the same exchange rate calculation formula and do not consider the central bank’s efforts to control the price. Therefore, it is expected that the price will rise again to the range of 60,000 tomans and then 70,000 to 75,000 tomans.

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