Economy, Business And Markets

Rial Falls as Investors Sell Off Stocks

Rial Falls as Investors Sell Off StocksRial Falls as Investors Sell Off Stocks

T he US dollar rallied after two days of decline against the rial, as investors sold their shares to buy dollars as a row between Iran and the United States sent investors running for safety.

Iran hit out Friday against US Secretary of State John Kerry, accusing him of threatening military action against Tehran if it fails to respect a historic nuclear deal sealed on July 14, AFP reported.

“Unfortunately the US secretary of state once again talked about the rotten rope of ‘the ability of the US for using military force’,” said Iranian Foreign Minister Mohammad Javad Zarif in a statement.

Despite the agreement reached with Iran on limiting Tehran’s nuclear energy reach, several US officials, including Secretary of State John Kerry and Defense Secretary Ashton Carter, have signaled that military force remains on the table to prevent Iran from obtaining nuclear weapons.

The political blows exchanged between Iran and the US, among other reasons, got a quick response from edgy investors in Tehran, sending the dollar up to a two-week high of 32,960 rials by 0842 GMT on Saturday.

Later, high prices prompted some traders to reasses and cut their positions, bringing the benchmark exchange rate lower, though prices remained well above the day’s 32,380 rial open.

The greenback changed hands at 32,570 rials by 1256 GMT, up two-thirds of a percent for the day, Tehran Gold and Jewelry Union data showed.

The euro and the Emirati dirham were the biggest winners of Saturday’s trade. The European currency jumped 1.11% to 36,300 rials, highest since July first. The dirham on the other hand rose 1.02% to a three-week high of 8,950 rials by 1256 GMT.

Meanwhile, investors sold off stocks, sending Tehran Stock Exchange’s main index, TEDPIX, down 0.9% to a two-week low of 67,236.30 points by the session’s close.

TSE’s free float index, which weighs share price changes based on companies’ floating shares, tumbled almost 1% to 76,339.20 points, to its lowest since July 6. The index is considered the premium measure of the exchange.

Petroleum dominated over-the-counter market, Iran Fara Bourse, also fell without a fuss. The IFX index fell 1.42% to 791.82 points, also a two-week low.

Investors have become wary of political comments that question the nuclear deal between Iran and the P5+1—the United States, Britain, France, China, Russia and Germany—holding. The July 14 accord ends a 12-year dispute between Iran and the West over the scope of Tehran’s nuclear activities. Under the agreement Iran will limit its nuclear energy program in exchange for the lifting of sanctions imposed by the United Nations, European Union and United States.

The deal has been a cause for celebration for traders and listed companies who have watched their returns dwindle or evaporate altogether, due to sanctions and poor economic management. But the agreement’s long implementation process has made investors cautious in their reaction to news surrounding the issue.