The Economy Minister Farhad Dejpasand placed responsibility for the deep downturn in the share market on other administrative bodies, namely the Industries Ministry and Central Bank of Iran.
Dejpasand said this on Tuesday in a meeting with the Majlis Economic Commission held to discuss the highly critical condition of the bourse and find ways out of the crisis.
"Share market is a place for discovering prices and the government's task is to facilitate this efficiently," he was quoted as saying by IRIB news.
"The government is tasked with paving the way for improving the liquidity of shares," he noted, adding that the task has been done appropriately in the past two months.
The minister shrugged off responsibility and blamed the CBI for manipulating interbank interest rates, and singled out the Industries Ministry for special criticism for imposing pricing rules on commodities listed at the bourse.
After 300% gains in the first five months of the current year (March-August), the main index of Tehran Stock Exchange, TEDPIX, has plunged to 1.1 million points -- down from the record high of 2.1 million points.
Censuring CBI monetary policies, Dejpasand said the regulator played a key role in stock market volatility in recent months. In particular he recalled the steep ups and downs in interbank interest rates in the first few months of current fiscal year, which apparently made the share market more attractive for investment.
As per CBI data, interbank rates were choppy in the past 10 months. The rate on average was 18.95% last year (March 2019-20) before abruptly dropping to 10% in May that in fact laid the foundations for the unprecedented rise in share prices.
Interbank rates began to rise steadily in the months after to reach 23.2% in late October. The rate was reported around 20% in the month to Dec. 20.
"When interbank interest rates suddenly jump to 20%, the share market will be affected," the minister said.
Observers say the sharp decline in interbank rates was a “positive signal to stock market” and the main cause behind the departure of liquidity from banks to the bourse as parking money in banks was no longer attractive.
Dejpasand said the Industries Ministry intervention in pricing goods of listed companies had a negative impact on the companies' profits.
In recent days the plan to intervene in the share market and control steel prices has become a hot topic. The minister also criticized intervention in pricing refinery products, cement and mineral products.
