Facing Rial Pressure, But Depreciatory Trend Remains

In spite of recent volatility, we expect the Iranian Rial to continue to gradually depreciate against the dollar, as the government seeks to ensure non-oil exports remain competitive. Indeed according to the most recent Article IV with the IMF - there is no official central bank data on the exchange rate policy - the authorities noted that 'the current level of the exchange rate was favourable to the tradable goods sector', and they would therefore continue to support this policy over the coming years. However, as recent trade action shows, appreciation is an option if inflationary pressures become too much

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