Market News

– After the recent directive allowing Iran Central Bank to get involved with the nation’s FX market, now the cabinet members is to expand the scope of CBI activities even more to include not only FX policies but also monetary ones. Doing as such, the CBI has now granted 3 new instruments to balance the currency/monetary needs:

• Issuance of IRR-FX denominated Sukuk Musharakah securities;
• Acquiring Buy\Sell positions on the secondary FX market;
• Performing the real Open Market Operation – OMO – (in both currency and money markets)

Moreover, foreign investors will enjoy a 5-year residency of Iran in case of an investment of at least USD 250K.

– Agah analyses show that by the continuation of CBI’s 15% official interest rate policy, the volume of sight deposits raised in Iran banking sector and depositors flew their money from term deposits. Just from the beginning of 1397 (Apr 21, 2018) a figure of IRR 80,000 bn (USD 1.90 bn – USD/IRR 42,000) has been moved from term to sight deposits. the below picture demonstrates the details:

– Credible sources say that India is to continue oil purchases from Iran after the US sanctions deadline on November 04, 2018. Apparently, Indian oil refineries already placed a 9 mn barrels purchase order for November. 6 mn barrels of said order is for Indian national oil company and the other 3 will be used by Mangalore company. During the October 2018, Indian had imported 10 mn barrels of Iranian oil which seems to be reduced slightly after November 4, 2018.

– After the recent jumps of risk-free rate in Iran Debt Market and with reduction of FX fluctuations, rates are now backed to more reasonable levels and hover around 20% again. The advancement of Iran capital market along with better than expected political news are the main catalysts behind this reduction. The below image demonstrates the year-long trajectory of risk-free rate in Iran economy:

In the Market

The stock market fell on today’s session as emotional behaviors  outweighed analysis amid market participants. The entrance of rookie traders who used to be day trading on FX and gold coins markets made the situation even worse since irrational decision makings are now happening more in the market. TEDPIX (-0.79%) raised right after the opening bell and left more than 3,000 positive points behind, however, the index fell rapidly when baseless rumors start to spread and closed at 184,085.22. IFEX (-0.26%) performed exactly the same and its components with massive buy queues ended the day below their flat lines.

Agah stats show that by the end of last trading session (Wednesday, Oct 03) only a small amount of previously injected cash was withdrawn from the market by the retail investors. Moreover, data tells that the volume and value of retail trades (blocks and whole trades excluded) stamped yet another record high with an astonishing figure of IRR 23,000 bn (USD 547.62 mn). The numbers of today’s cash injection (withdrawal) – to be released by tomorrow morning – shall be indicative of the short-term trend.

Also, the Iranian parliament has an extremely important open session tomorrow about the vital CFT convention ratification which can have a massive effect on the foreign currencies rates and eventually the long-term trajectory of the capital market.

Source:

2018, Iran Central Bank issues FX denominated bonds!, Saturday, Oct 06, p.1,<https://agahgroup.com>