Economy, Business And Markets

Markets Brace for Impending Nuclear Deadline

Markets Brace for Impending Nuclear Deadline Markets Brace for Impending Nuclear Deadline

T he rial fell against all major currencies on Sunday following negative cues about the negotiations between Iran and the six world powers. Stocks also tumbled.

An accord to curb Iran’s nuclear program remains elusive due to disagreements on fundamental issues, France’s foreign minister said on Saturday in Vienna, just days before the June 30 deadline for a deal.

Ferdowsi Street–the hub of foreign exchange in Iran–quickly reacted to the news. All major currencies and gold coins rose.

The US dollar went up 0.91% to a three-week high of 33,330 rials by 0942 GMT on Sunday. This is the third consecutive day of gains for the greenback.

Conversely, Iran’s equity markets did not take well to the French foreign minister’s comments. Both Tehran Stock Exchange and Iran Fara-Bourse—Iran’s over-the-counter market—dipped on Sunday.

 Three Conditions

Laurent Fabius spoke to reporters upon arrival in the Austrian capital after top US and Iranian diplomats said hard work was still needed for what could be their final negotiations to bridge significant differences, Reuters reported.

“What we want is a robust deal that recognizes Iran’s right to civil nuclear power, but guarantees that Iran gives up definitively the nuclear weapon,” Fabius said.

The top French diplomat is a close ally of Israel and his comments on Iran normally reflect the views of the occupying regime.

For this, there were three “indispensable” conditions, he said: A lasting limitation of Iran’s research and development capacity, rigorous inspections of sites, including military if needed, and the automatic return of sanctions if Iran violates its commitments.

“These three conditions respect Iran’s sovereignty. They have still not been accepted by everybody, yet they form the key base of the triangle that forms the robust agreement that we want,” he claimed.

The self-imposed deadline for a deal under which Iran would cut back its nuclear program in exchange for relief from economic sanctions, expires on Tuesday.

 Market Reactions

Sterling gained the most among the majors. The British currency rose 0.94% to 52,762 rials by 0942 GMT, its highest since March third.

The euro was 0.27% to 37,250 rials on Sunday on Ferdowsi Street. Euro’s gains against the rial were curtailed by its weaker close versus the dollar in international markets on Friday, as Greek debt talks remained in a deadlock. The European unit of value retreated 0.34% to 1.1167 versus the greenback in the forex markets on Friday.

Iran’s main trade partners’ currencies were also among the gainers. The Emirati dirham and the Turkish lira rose 0.56% and 0.79% to 9,050 rials and 12,800 rials respectively. The dirham is at a three-week peak against the rial.

The lira and the dirham are gauges of bazaar activity, as Turkey and the United Arab Emirates are gateways for importing consumer goods into Iran.

Other well traded currencies also gained on Sunday, with the Canadian dollar rising 0.37% to 27,300 rials and the Australian dollar gaining 0.35% to 25,700 rials.

The Swiss franc was also up 0.28% by 0942 GMT and changed hands at 35,600 rials on Fredowsi Street. The Swiss currency’s menial gains were due to its correlation with the euro.

Gold coins also gained as safe haven demand increased in Tehran. Benchmark bullion coin Azadi rose 0.77% to 9,140,000 rials.

Gold coin futures on the Iranian Mercantile Exchange also rose. Futures for July delivery settled 0.54% higher at 9,061,401 rials.

Stocks also had a bad day in Tehran.  TEDPIX, Tehran Stock Exchange’s main index, tumbled 0.79% to 64,301.40 points, dragged down by refineries and banks, which stand to lose the most if the nuclear talks do not culminate in a final deal.

Petroleum shares also left their impact on  Iran Fara-Bourse’s IFX, which dipped 1.47% to 724.36 points.