Before trading closed on Wednesday, the final working day of the week in Iran, the Tehran Stock Exchange reached a record 7,766,000 points.
The market has risen 109 percent since the start of the Iranian year, while small investors poured roughly 4.7 trillion tomans, or about $19 million, into shares in a single day.
Iran’s prominent economic daily Donya-ye Eghtesad argues that the surge is not necessarily a sign of confidence. People are buying shares as political and economic risks rise, it says, while savers are also moving into gold, coins and dollars, all of which hit record highs on the same day.
The open-market dollar has passed 250,000 tomans, while measured in dollars, the stock market remains well below previous peaks.
At least part of the rally therefore appears to reflect a search for protection against the falling rial rather than confidence in the underlying economy.
Similar pressures are visible in consumer markets, where prices for cheaper mobile phones rose 33 to 42 percent in a month, outpacing the currency’s decline as import quotas, registration rules and fees hit lower-priced devices particularly hard.
Earlier this week, the government announced that the central bank would sell up to $2 billion in cash. The first $1 billion tranche is being sold through banks, with adults holding a national ID card allowed to buy up to $10,000.
The government’s own newspaper, Iran, warned that selling cash may slow the dollar’s rise but cannot reverse the underlying trend while inflation, budget pressures and political uncertainty remain unresolved.
Tehran’s prosecutor also ordered action against “market disruptors,” including online channels publishing exchange rates. Eyewitnesses on Ferdowsi Avenue, the capital’s main currency-trading hub, reported shorter queues and more sellers than buyers on September 30.
The respite was brief. On October 1, the open-market dollar rose 1.49 percent to 2,593,000 rials, its highest level in a year.
The central bank has been steadily raising the official exchange rate, from about 137,000 to more than 174,000 tomans this year, to encourage exporters to repatriate their foreign-currency earnings. Even so, the open-market rate remains much higher.
Because official imports are priced at the exchange-center rate, increases can feed through into the cost of imported goods. They also reduce the real value of the government’s electronic food-voucher scheme unless the state spends more rials to maintain it.
Hardline outlets including Kayhan and the IRGC-linked Javan portray the rial’s fall as part of Washington’s economic war. But their criticism is also directed at Iranian policymakers.
Kayhan calls currency sales a repeatedly failed policy and a waste of resources in wartime. It wants the government to reverse its economic liberalization and use judicial and security pressure to force exporters to repatriate their foreign-currency earnings.
The criticism exposes an argument within the establishment over how Tehran should respond: spend scarce foreign currency trying to contain demand, or preserve it while tightening controls over exporters and the domestic market.
That argument is becoming more urgent as the US blockade curtails Iranian oil exports, depriving Tehran of a major source of foreign currency.
Diplomacy could provide some relief, with Iran seeking access to frozen assets and an easing of sanctions and the blockade as part of negotiations with Washington.
For now, however, the clearest signal comes from the markets themselves. Stocks, gold and the dollar are all setting records. The simultaneous rush into them suggests that for many Iranians, almost anything that might preserve its value increasingly looks preferable to holding rials.
