Iran
A man exchanges Iranian rials for US dollars at an exchange shop in Tehran on August 8, 2018. File photo: Atta Kenare/AFP
Sanandaj, Iran — Kambez Shahabi, 25, had promised to marry his fiancee within months, but the collapse of the Iranian toman against the dollar worried him. Following his friend’s advice, he sold his car and invested in the stock market, like many other Iranians looking to boost their meagre salaries.
Initially, the market did well, and Shahabi, from Sanadaj in Iran’s Kurdistan province, got enagaged. The couple decided to hold their wedding a few months later, but their dream was cut short as the stock market began to crumble under the weight of continued economic sanctions.
Now, Shahabi cannot afford a car, and their wedding may not happen.
The collapse of the value of stock market began in mid-August, and it continues to plummet.
“I had saved 150 million tomans ($6,000), and when the value dropped I thought my money would be worthless. Therefore, five months ago, a friend of mine suggested putting my money in stocks. Initially, the trade went very well and I decided to sell my car for $4,000 and put the money in stocks as well,” Shahabi said.
While Iran's official currency is the rial, Iranian tomans are used in everyday life. One toman is equal to ten rials.
Shahabi works at a computer repair company for $150 a month. While speaking to Rudaw English, he seemed uncomfortable, constantly checking his phone for news on the stock market. It was all negative.
“I have been in love with a girl for three years. I promised her I would marry her. After I gained some money from the initial increase of the value of the bourse, we held our engagement party. We decided to hold the wedding this summer,” he said.
“After we got engaged, the market collapsed and I had hoped every day that its value would go up one day. However, now the value of my money has halved and the price of the car that I sold is now so high that I cannot afford another one. I am about to go crazy. I am not worried about myself ,but for my fiancee, who is waiting for the wedding. I cannot hold my wedding as long as I am in this condition.”
Iranian officials, including President Hassan Rouhani and the head of Iran’s central bank, Abdolnaser Hemmati, have called on people several times this year to invest in the country’s stock market, a popular choice as the value of Iran’s currency continued to fall against the dollar.
In March, the market grew, encouraging some people to sell their houses and cars, to invest more. Then the bubble burst.
The spread of coronavirus, decrease of the value of the toman, inflation, and the collapse of the stock market has created a dangerous situation where even the middle class fear they may lose their savings. The value of Iranian currency reached an all-time low this week amid news of further US sanctions against Iran.
One stock market in Sanandaj used to be crowded with people eager to invest in the market. It now lies empty.
Sonya Fathi, 32, is a teacher. She told Rudaw English that she has lost more than half of her income due to the collapse of the stock market.
“I, too, believed in the suggestion made by the officials. Four months ago, I put 100 million toman ($4,000) - which I had saved during 10 years of work- in stocks. Initially, it was good and the value increased but it has kept losing its value in the last month,” she said.
Fathi also said that the stock exchange in Sanandaj is now empty. “We would wait for hours to complete the paperwork. They would advise us to sell our houses and cars as well and put the money in stocks. However, after the collapse of the stock market, they have all gone into hiding and closed the office on the grounds of coronavirus.”
Kamaran Kasrayi is an economist who teaches at Sanandaj University. He told Rudaw English that the government is partly to blame for the collapse of the stock exchange.
“Each stock market has its own ups and downs…but the increase and decrease of the Iranian market was not normal and the government played a negative role. Initially, the value of the public companies increased every day while the government itself decreased the values. The increase was fake and sudden. So it collapsed.”
"Stock market experts also had a role in the collapse as they sold part of their stocks before the collapse. World markets have been divided into two groups. Governmental companies do not have a significant role in markets in developed countries like the USA and Japan, but Iranian stocks have been monopolized by governmental companies. This gives the government a good chance to play a role,” added Kasrayi.
The expert also said that “political events can also have a significant impact on bourses, such as the US election in this fall - which has terrified the Iranian economy.” He added that he does not expect a significant change in the value of stocks because of the election.
“The fall of the toman’s value against the US dollar directly affects the value of stocks. However, I reiterate that none of these changes have as much impact as the government.”
The continued crisis pushed the Iranian parliament to discuss the subject in a closed meeting on Sunday. At the end of the meeting, Parliament Speaker Mohammed Baqr Qalibaf said that the legislature had decided to work on resolving the issue.
Translated by Karwan Faidhi Dri
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