Dollar Price in Iran After Negotiations: Further Decline, Stabilization, or Resurgence?

The steep decline in the price of the dollar and other foreign currencies in the Iranian market shortly after the conclusion of talks between Iran and the United States in Oman has been likened by some observers to a tsunami. In the past two days, the price of foreign currencies in the free market has fallen by about 20%, with the price of the US dollar reaching 85,000 tomans on Monday morning. The trend of falling gold prices in Iranian markets also continued on Monday morning, with the price of the Imam coin reaching 77 million tomans. Each Bahar Azadi coin decreased by 9 million 310 thousand tomans, bringing its price to 70 million 195 thousand tomans. At the end of Esfand, the price of the Imam coin had reached 97 million tomans and the Bahar Azadi coin 87 million tomans. On Sunday morning, April 24, the price of the dollar entered the 80,000 tomans range and even briefly reached 83,000 tomans. The value of the Iranian rial, which had previously fallen to 106,000 tomans against each dollar, was at around 100,000 tomans just a day before these talks. However, following the conclusion of this meeting and especially after the release of the White House statement, the dollar price entered the 94,000 tomans range on Saturday, and the decline continued on Sunday. Meanwhile, hardline political groups such as members of the Stability Front and media outlets like Kayhan newspaper fundamentally claim that they do not foresee a bright outlook for these negotiations. Even the 'Javan' newspaper, which is close to the IRGC and has shown empathy towards these talks in its main headline, stating that 'the likelihood of negotiations turning into a direct method is high,' has issued a 'serious warning' regarding the outcome, writing that even if an agreement is reached, Iran's economic problems will not be resolved and this expectation is akin to hoping for a 'fantasy point.' Jooad Rahimpour, an economic expert in Tehran, stated in an interview with Radio Farda that the dollar's price drop relative to the base in Iran is not unprecedented, and the 20,000 to 25,000 tomans drop in the free market may be numerically significant but does not differ percentage-wise from past experiences. Rahimpour believes that if the discussions surrounding Iran and the US continue in this manner, there is hope that the dollar price in the unofficial market will stabilize within the range of 80,000 to 75,000 tomans. He argues that further declines in the dollar's price will shock the 'real supply and demand sector,' negatively impacting Iran's production, exports, and imports. Regarding citizens' expectations for lower prices of goods and services in Iran, Rahimpour states that consumer goods prices are determined with the dollar around 70,000 tomans and do not align with the psychological expectations of the dollar. Nonetheless, he believes that if the trend of these negotiations continues positively and the official dollar price falls, a decline in the prices of goods in the market can be expected in the coming months. This economist also notes that the approach to the new fiscal year is an additional factor, stating that the government has predicted liquidity injections due to its budget deficit, and if these negotiations do not lead to any breakthroughs, that budget deficit will need to be injected into the economy, which will prevent prices from decreasing. Rahimpour mentions the lifting of oil sanctions and the release of Iran's blocked funds as conditions that could help the government stabilize the currency rate at its current level. He advises Iranian citizens to consider moderate analyses against maximalist analyses—often aligned with the government—when making their economic decisions. According to Rahimpour, those who previously purchased dollars or gold will maintain their purchasing power if the national currency strengthens. He adds that if someone has bought currency and its price has fallen, they will not incur losses in the event of a potential agreement. In many cases, citizens do not understand the difference between purchasing power and the value of the national currency, and naturally, speculators and market manipulators exacerbate this issue.