Rial Bounce To Continue In S-T; But L-T Weakness

The Iranian rial has broken through trendline resistance and at the time of writing on December 15 was trading at IRR9,935/US$. In line with our expectations for further dollar weakness against the euro in the short term, we see the rial continuing to bounce. The rial's weakening phase since July has mirrored dollar strength, and so it is unsurprising that a correction in the latter unit's trajectory has had the opposite effect on the Iranian currency. Since the beginning of last week (December 8), the dollar has dropped 5.8% (from US$1.272/EUR to US$1.346/EUR) and on December 12 we noted that

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