Hezbollah or Farzin: Who Holds the Reins of the Dollar?
Hezbollah or Farzin: Who Holds the Reins of the Dollar? According to Iran Gate, the surge in the dollar’s price following the Al-Aqsa Storm operation has caused concern among many Iranian citizens. Many currency market experts and activists believe that the more the situation in the Gaza Strip escalates, the more the dollar’s price will increase. However, even if this war were not ongoing, we should have expected a surge in the foreign exchange market.
The dollar price in Tehran’s open market, after five months of not reaching the 50,000 Toman mark, fluctuated around this level once again due to sparks ignited in Palestine and the occupied territories. Now, two fundamental questions arise: First, will the dollar experience further surges with the intensification of the war in Gaza? Second, if the war ends, will the rising trend of the currency price in Tehran’s open market continue or stop? This report attempts to answer these two questions.
Storm in Israel, Earthquake at Istanbul’s Crossroads
October 7, 2023, will be an unforgettable day for the world’s public opinion. Perhaps this day will never be forgotten and the Hamas attack on Israel will be equated with the Islamic fundamentalists’ attack on the World Trade Center and the Pentagon on September 11, 2001. However, just as it happened on September 11, 2001, this event caused a sudden surge in the dollar rate.
Prior to the Hamas attack on the occupied territories, the dollar was traded around 48,500 Tomans, but with the start of the Al-Aqsa Storm operation, it experienced a rapid growth of over 10%, reaching 54,000 Tomans. This increase of over 6,000 Tomans led to the reformation of currency purchase queues at Istanbul’s Crossroads and Ferdowsi Square. Statements from President Raisi’s government officials, supporting this operation on Israeli soil, fueled the fire that had engulfed the market.
Cold Water on the Dollar’s Body
The dollar’s upward trend in the market only subsided after Ayatollah Khamenei’s speech about the Al-Aqsa Storm operation. So much so that only minutes after the news of this speech was published in news agencies, we witnessed a decrease of about 3,000 Tomans in the dollar rate in the open market. Market activists also believed that the words of the Supreme Leader of the Islamic Republic signified Iran’s withdrawal from any confrontation with Israel. Thus, we witnessed a drop in currency prices on October 10, 2023, influenced by the Islamic Republic’s clear stance on the Gaza war.
The Bouquet Raisi Planted in Ferdowsi Square
The downward trend in the currency rate continued for two days after Ayatollah Ali Khamenei’s speech, with the dollar fluctuating around the 50,000 Toman level. However, this trend did not persist. The contradictory and sometimes conflicting positions taken by the Islamic Republic’s government officials caused market activists to have serious doubts about the future, doubts that strengthened the possibility of Iran entering into war and conflict with Israel.
Therefore, once again, with each speech by Amir-Abdollahian and Ebrahim Raisi, the currency rate entered an upward phase, fluctuating between 51,500 Tomans and 52,000 Tomans. During this period, activists and experts believed that if the Raisi government refrained from commenting on issues related to the Israel-Hamas war, the currency rate would certainly return to the 48,000 Toman range.
The Fire at the Al-Mamdani Hospital Engulfed the Rial
Given the incoherent positions taken by Raisi’s government officials, market activists expected another speech by the Supreme Leader of the Islamic Republic to once again trigger a downward trend in the dollar rate. However, this time, such an event did not occur, as Ayatollah Khamenei, contrary to his previous speech, adopted a harsh stance, effectively threatening Israel with the opening of new fronts on its northern borders with Lebanon. Consequently, the dollar rate entered an upward phase and returned to the 52,000 Toman channel.
The devastating explosion at the Al-Mamdani Hospital in northern Gaza, which claimed over 500 lives, also impacted the dollar’s price increase, stabilizing the rate at 52,500 Tomans at the time of this report’s preparation.
Farzin or Hezbollah
As mentioned, the market is heavily influenced by the potential opening of a new front in northern Israel, a front that could signify the involvement of the Islamic Republic in a war with Israel. Although evidence does not suggest Hezbollah’s imminent entry into war and conflict with Israel.
Mousa Al-Marzouqi, a member of Hamas’ political bureau, also complained about Iran, stating that Hamas expected more from the Islamic Republic. All these signals have somewhat reassured the currency market, but the occasional statements by government officials have shaken the Rial and worried Iranian citizens.
However, many economists believe that the primary reason for the Rial’s devaluation is not the intensification of the war in the western Middle East, but rather that they believe the over 40% inflation in the country has caused the Rial to collapse with every jolt, losing its value more and more. For this reason, experts and activists are more eagerly awaiting the Central Bank of the Islamic Republic of Iran’s positions than the decisions of Israel and Hezbollah. In fact, some believe that the reins of the dollar are in the hands of Hassan Nasrallah and Benjamin Netanyahu, while others believe everything is under Mohammad Reza Farzin’s control.
However, it seems that in the short term, the currency market will be influenced by developments in the Gaza war, but in the medium term, we are highly likely to witness a more than 40% decline in the currency rate in the coming year, which means breaking the 70,000 Toman record for the dollar during the discussed period.