The recent cut in the deposit rate ceiling, from 22 percent to 20 percent, will probably help send part of the savings to the equity market, an expert has said.
Sassan Shahveisi, a university lecturer and deputy director at the Strategic Studies Research Center, has examined potential impacts of the decision by the Money and Credit Council on the equity market, securities and exchange news website SENA reported.
He believes any changes in the interest rates would affect the flow of capital into the market. The expert says the equity market in Iran has long been suffering from economic and political shocks. In addition, it had to be competing with the smuggling market in past years, he added.
“The recent cut in the deposit rate may well serve as a booster for the equity market attracting more liquidity.”
Citing Jafar Joula, the managing director of the Saba Investment Firm for Water and Electricity Industries, SENA say the cut in the deposit rate may temporarily disturb the balance in the financial markets by causing migration of funds from money market to the equity market.
However, as Joula puts it, the trend will be further solidified if foreign relations of Iran with the world improve in parallel, and attractive prices are offered in the stock markets for investors.
