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Iran's Currency Rebounds Strongly After Steep Fall  
User currently offlineflightfan4ever From , joined Dec 1969, posts, RR:
Posted (1 year 9 months 3 weeks 2 days 17 hours ago) and read 1500 times:

In what is a hugely positive development for the Iranian economy, the value of the Rial has made record gains, having rebounded strongly in recent days after steep falls last week:

http://www.washingtonpost.com/busine...-11e2-9a39-1f5a7f6fe945_story.html

Compared to the all time lows reached last week where the Dollar traded for around 40000 rials, the Rial has now made even higher all time record relative gains and is now trading for approximately 29000 to the Dollar. This represents a 38% increase on the value of the rial in a matter of days. In other words Iranians who held onto their Rials last week are 38% wealthier this week. Maybe this should be a lesson to those Iranians who wildly rushed to sell their nations own currency last week at extortionate levels - they just threw away 38% of their net wealth.

I wonder why the rebound of the Rial isn't being reported by the press with the same hysteria that it's fall was. So much for an objective and free media...

8 replies: All unread, jump to last
 
User currently offlinealoges From Germany, joined Jan 2006, 8695 posts, RR: 43
Reply 1, posted (1 year 9 months 3 weeks 2 days 16 hours ago) and read 1481 times:

It's an interesting topic, but I do have my issues with the rhetoric.

Quoting flightfan4ever (Thread starter):
I wonder why the rebound of the Rial isn't being reported by the press with the same hysteria that it's fall was. So much for an objective and free media...

Bad news trumps good news, every single time.



Walk together, talk together all ye peoples of the earth. Then, and only then, shall ye have peace.
User currently onlinecasinterest From United States of America, joined Feb 2005, 4475 posts, RR: 2
Reply 2, posted (1 year 9 months 3 weeks 2 days 13 hours ago) and read 1436 times:

Quoting flightfan4ever (Thread starter):
approximately 29000 to the Dollar. This represents a 38% increase on the value of the rial in a matter of days. In other words Iranians who held onto their Rials last week are 38% wealthier this week. Maybe this should be a lesson to those Iranians who wildly rushed

A bounce of the lows is not unexpected. However will the trend continue or will it reverse and go down? A lot has to do with the internal policies within Iran and their oil exports.



Older than I just was ,and younger than I will soo be.
User currently offlinePanHAM From Germany, joined May 2005, 9165 posts, RR: 29
Reply 3, posted (1 year 9 months 3 weeks 2 days 11 hours ago) and read 1407 times:

The value of the Rial to the US$ is irrelevant since there are 2 exchange rates anyhow, the official and the black market rate.

Since Iranians have to buy their food in Rials and have to live with 70% inflation per month, most of them could give a damn how much the outside value is. 70% per month is hyper inflation and that is what hurts. That way, any cash on hand should better be spent as quick as possible.



E's passed on! That parrot is no more! He has ceased to be! E's expired and gone to meet 'is maker!
User currently offlinemham001 From United States of America, joined Feb 2005, 3572 posts, RR: 3
Reply 4, posted (1 year 9 months 3 weeks 2 days 9 hours ago) and read 1382 times:

The depth of that article is disappointing. The don't mention that the government has effectively shut down private trading by arresting 22 dealers last week. They do say "Exchange houses were open Monday but little transaction was under way", but then fail to make any correlation between the two events.

You might try this Reuters article...http://www.chicagotribune.com/news/sns-rt-us-iran-currencybre8980hg-20121009,0,3827503.story


User currently offlineflightfan4ever From , joined Dec 1969, posts, RR:
Reply 5, posted (1 year 9 months 3 weeks 2 days 9 hours ago) and read 1378 times:

Quoting PanHAM (Reply 3):
Since Iranians have to buy their food in Rials and have to live with 70% inflation per month, most of them could give a damn how much the outside value is.

It's true that many staple items are produced domestically in Iran, thereby nullifying the significance of forex in such instances, however when you factor in the effect that a devalued currency has on imports - you might just give a "damn" when you go to buy a foreign made car or TV or refrigerator as see how the prices have transofrmed. The good news is that the Rial is on a steady path towards recovery (see link from the Washington Post in the opening post).

Quoting PanHAM (Reply 3):
70% per month is hyper inflation and that is what hurts.

It's best to try and take such estimates with a pinch of salt:

http://www.livetradingnews.com/is-ir...tion-as-bad-as-perceived-88932.htm

It's true that there have recently been steep increases in the Retail Price Index in Iran, however to say that Iran has experienced 70% inflation across it's RPI in the past month is a wild exaggeration to say the least. As a case in point, just look at the % change in the price of gasoline in Iran over the last 4 weeks - 0%. The % change in the price of utilities in the last 4 weeks?.....0%. Many other vital goods have remained stable in price, so to suggest a monthy inflation rate of 70% is simply an attempt at fearmongering to cause panic amongst the Iranian people.

Understand that prices have gone up on a significant number of items, however it's not all encompassing, and therefore by definition a false claim to suggest that the RPI has increased 70%. As evidence of this, check back at this thread in 4 weeks time and look up the % change in the Iranian RPI - I am convinced that it will be no where near a 70% change. In fact, I will be very surprised if the % change is not in the single digits.

Interestingly in the link above, Ehad Mostaque, an analyst at London’s Religare Capital Markets is predicting that the Iranian Rial will stabilize at a median rate of 23000 Rials to the Dollar. Should this happen (and I'm convinced that it will) this would represent a 82% increase in the value of the Rial relative to the Dollar compared with the black market peak Rial price of the Dollar at 42000 last week.

When this happens, those Iranians who wildly rushed to sell / betray their nations own currency during frenzied trading last week will have thrown away 82% of their net wealth - Ooooops.... so much for the "good old greenback".


User currently offlineAR385 From Mexico, joined Nov 2003, 6133 posts, RR: 30
Reply 6, posted (1 year 9 months 3 weeks 2 days 8 hours ago) and read 1357 times:
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Quoting flightfan4ever (Thread starter):
In other words Iranians who held onto their Rials last week are 38% wealthier this week.

Wealthier? How exactly? Do Iranians have free access to US dollars and markets where things in US dollars are freely available to buy?

Quoting aloges (Reply 1):
Bad news trumps good news, every single time.

It´s not exactly good news. Given the structure of the Iranian economy and the rigidities sanctions have created, it´s irrelevant news.

Quoting flightfan4ever (Reply 5):
Many other vital goods have remained stable in price, so to suggest a monthy inflation rate of 70% is simply an attempt at fearmongering to cause panic amongst the Iranian people.

You do realize what inflarion is, don´t you? because it seems you have no idea. Inflation is an index of the constant increase of a basket of goods over time that a typical family needs to have a basic living. Unless Iran has a different way of measuring inflation or defines it as something else, 70% inflation means constant impoverishment. And there must be some ring to it, as one of Iran´s people main griefs against their regime, or their prxoy puppet, Ahmadinejad, is the state of the Economy.

This picture of things you´ve been wishing to portray in the threads you start about Iran, well, It´s not plausible and I don´t buy it.



MGGS
User currently offlineflightfan4ever From , joined Dec 1969, posts, RR:
Reply 7, posted (1 year 9 months 3 weeks 2 days 4 hours ago) and read 1327 times:

Quoting AR385 (Reply 6):
Wealthier? How exactly? Do Iranians have free access to US dollars and markets where things in US dollars are freely available to buy?

If you are unaware of the economic and trade realities of Iran, then with respect you really have no business posting on a subject with which you have little or no understanding - understand, I really don't meant to be rude, I'm just telling it like it is.

Quoting AR385 (Reply 6):
You do realize what inflarion is, don´t you?

Lol, I'm guessing that you mean inflation... Do you understand what Retail Price Index (RPI) means? It's what I stated in the post that you responded to, it is also one of the pillars of Iranian monetary policy:

Quoting flightfan4ever (Reply 5):
It's true that there have recently been steep increases in the Retail Price Index in Iran, however to say that Iran has experienced 70% inflation across it's RPI in the past month is a wild exaggeration to say the least. As a case in point, just look at the % change in the price of gasoline in Iran over the last 4 weeks - 0%. The % change in the price of utilities in the last 4 weeks?.....0%. Many other vital goods have remained stable in price, so to suggest a monthy inflation rate of 70% is simply an attempt at fearmongering to cause panic amongst the Iranian people.

As I commented earlier, try to take the media commentary on Iran with a huge pinch of salt. Objective reporting is a rare act these days, and on the subject of Iran, almost non-existent.

The RPI of Iran is NOT running at 70% expansion for the reasons outlined above. The 70% hyperinflation myth echoed in the media related to the relative purchasing power of the Rial in light of the recent wild currency fluctuations which have been taking place. Since then, the Rial has made a strong and defiant recovery of 38% on the Dollar, with all signs suggesting that the strong recovery will continue until the Rial returns to its logical rate.

I suggest that you revisit this thread one month from now and see what the October - Novemeber RPI is running at. My guess is that it will be in the single digits, thereby exposing the "70% hyperinflation" hypotheses for what it really is - a myth  


User currently offlineAR385 From Mexico, joined Nov 2003, 6133 posts, RR: 30
Reply 8, posted (1 year 9 months 3 weeks 2 days 4 hours ago) and read 1322 times:
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Quoting flightfan4ever (Reply 7):
If you are unaware of the economic and trade realities of Iran, then with respect you really have no business posting on a subject with which you have little or no understanding - understand, I really don't meant to be rude, I'm just telling it like it is.

And still, you have not answered my questions.

I can tell you that the RPI overstates inflation basically because a third of it is made up by the Carli index, and I am sure you know what that is. Many countries have dropped "RPI" in favor of CPI. RPI, if anything, overstates CPI.

So if that 70% is a "myth" as you say, and I´d like to see some proof of why you say it is a myth, then Iran is playing around with its numbers. What you cite as "reasons above" is worthless unless you are able to show a direct link in the prices of the commodities you cite as evidence and RPI, and the role they play in Iran´s RPI. Besides, in RPI or CPI, 4 weeks is just a worthless dot in time.

You also need to keep in mind that sudden currency appreciations and sudden RPI or CPI slowdowns are not necessarily a good thing.

Quoting flightfan4ever (Reply 7):
Lol, I'm guessing that you mean inflation...

Yes, I meant that. Have you never made a typo?

And keep in mind the following, please. The day you pay for my membership fee, that will be the day you can tell me "You really have no business posting on a subject." Not being rude, you know, just telling it like it is.

[Edited 2012-10-09 14:27:59]


MGGS
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