US dollar at new low in Iranian market
The exchange rate of the dollar dropped by 10,100 rials to hit 219,700 rials on Sunday compared to the price for Saturday, which was 229,800 rials, which marks 4.6 percent of drop according to figures by eghtesadnews.com.
The same happened to the euro, which fell by 12,140 rials on Sunday, and sold at 264,210 rials in the foreign currency market, indicating a 4.6 percent decrease.
On Sunday, the rate of each US dollar in official currency exchanges was 217,000 rials, 4.52 percent less than the figure for Saturday which was 226,800.
The rate of the rial began its declining trend in May 2018, when the US withdrew from the nuclear deal signed between Iran and the P5+1 in July 2015, and the reimposition of Washington’s unilateral sanctions on Tehran.
Mainly targeting Iran’s foreign trade, including oil exports, and the banking sector, the sanctions have been imposed in a bid to cripple the Iranian economy, a pipe dream pursued by the US and its allies, including Israel, which never came true.
According to IRNA, due to foreign policy developments and increasing hope for the success of the Vienna talks, the release of Iranian blocked currencies in other countries and the reduction of speculation in the foreign exchange market, the exchange rates of various currencies have been declining in recent weeks.
Crude market ready as Iran targets 2.5 mbd exports after US sanctions removal
Iran expects to export as much as 2.5 million barrels per day (mbd) of crude after the removal of US sanctions amid rising optimism over on-going nuclear negotiations in Vienna.
“Oil sales have dropped much. But the conditions are better now and we are more in control of the situation,” Vice President Es’haq Jahangiri was quoted as saying by Shana.
“We have the possibility to increase oil exports up to 2.5 million barrels of oil after removal of the sanctions.”
The third round of talks between the remaining members of the nuclear deal – Iran, Russia, China, France, Britain and Germany – concluded on Saturday and are expected to resume at the end of this week. The 2015 agreement waived sanctions on Iran’s oil sector in exchange for some modifications on its nuclear activities, spglobal.com wrote on Sunday.
Iranian exports have surged markedly since the November US presidential election of Joseph Biden, who made a campaign pledge to reverse course on US policy toward Tehran, marked by draconian sanctions under former president Donald Trump.
S&P Global Platts Analytics estimates Iran’s crude and condensate exports averaged 825,000 bpd in Q1 2021, up from 420,000 bpd in Q3 2020.
Oil sanctions agreement
Positive steps on nuclear talks last week point to an accelerated timeline for sanctions relief, according to Platts Analytics.
“Our reference case forecast for a framework deal by the summer and full sanctions relief by Q4 2021 will likely be revised to end-May and end-September, respectively,” Platts Analytics said in a recent note.
Talks between the US and Iran on sanctions relief could mean crude production will be 2.95 mbd by December 2021, according to Platts Analytics.
The US sanctions have severely confined Iran ‘s crude production, which averaged 2.3 mbd in March, according to the latest Platts survey of OPEC output. That is up from a 30-year low of 1.9 mbd last summer, but still far shy of the nearly four mbd it produced prior to the sanctions.
Iran’s top negotiator for a nuclear deal indicated that there is a tacit agreement to lift all US sanctions, including oil. Tehran has insisted on the removal of all US sanctions before a deal is concluded.
“We insist that sanctions... on Iran’s energy or the automotive industry, insurance and ports should be removed. And there is agreement on this part too,” Iran’s Deputy Foreign Minister Abbas Araghchi was quoted as saying by IRNA.
Mikhail Ulyanov, Russia’s envoy to the talks, sounded cautious optimism on the outcome of the Vienna talks in a Twitter post on Saturday.
“It’s too early to be excited, but we have reasons for cautious and growing optimism,” Ulyanov said on Twitter.
“There is no deadline, but participants aim at successful completion of the talks in approximately three weeks.”
The fact that Iran has already cranked up not just its crude but also its oil product exports and not just to China but elsewhere indicates that the market is ready for the increment from Tehran and is priced in, Mike Muller, head of Vitol Asia said on Sunday.
“Of course there is a lot of spare capacity left in OPEC, but if managed prudently, I think there is space for oil from Iran to return because it won’t come back in one big bang,” Muller said. “Even if it was happening right now today, probably you won’t see a huge amount of Iranian oil before the month of July because everyone has bought enough oil for June already.”
I think the market is ready for it. I think the market is pricing it already to a certain extent, he added.
Global investors flock to China amid improved business environment
Global investors’ enthusiasm for the Chinese market seems unstoppable despite the COVID-19 pandemic, as the latest data showed that China successfully navigated the economic fallout in the turbulent year and became the top investment destination worldwide.
In 2020, global foreign direct investment (FDI) flows plummeted by 38 percent from a year before to $846 billion, the lowest level since 2005, the Organization for Economic Cooperation and Development (OECD) said, according to ecns.cn.
The global FDI flows represented only one percent of world GDP, their lowest level since 1999, the OECD said.
OECD’s FDI figures echoed a report by the United Nations Conference on Trade and Development earlier this year, which also found China became the largest FDI recipient in 2020.
China’s appeal to foreign investment has extended into 2021, as the Chinese economy sustained positive performance in the first quarter, and foreign companies expected a promising future in the country.
A recent survey by the Ministry of Commerce shows that 96.4 percent of foreign-invested enterprises are optimistic about their business prospects in China.
The figure represents a 2.1 percent increase compared with the beginning of the year, the survey of over 3,200 foreign-funded firms said.
Official data also showed FDI into the Chinese mainland surged by 39.9 percent year on year in actual use to 302.47 billion yuan (about $46.74 billion) in the first quarter.
Liu Xiangdong, a researcher with the China Center for International Economic Exchanges, attributed the robust first-quarter FDI growth to a low base last year, sound economic fundamentals, and increasing attractiveness to foreign capital.
Considering the short-term low base and uncertainties ahead, the high growth rate of China’s FDI may not sustain, said Liu. “Yet China will remain attractive to foreign investors as the country continues to push forward reform and opening-up.”
Looking ahead, China has made great efforts to lure more global investors to its massive domestic market by widening market access and improving the business environment.
In January, a revised industry catalogue that opens up more sectors for foreign investors came into effect, encouraging more foreign capital to pump into high-end manufacturing.
Other measures included further implementing the pre-establishment national treatment plus negative list management system, accelerating the implementation of salient foreign-funded projects, and strengthening protection for foreign investment.
Iran prevents banks from bouncing checks amid coronavirus closures
The Iranian government ordered banks to stop bouncing dishonored checks until May 10 amid ongoing restrictions on businesses because of the coronavirus pandemic.
The Iranian president’s deputy for economic affairs said state-run and private banks would avoid issuing notices for bounced checks until May 10 to help businesses and individuals cope with the economic impacts of continued closures in the country, Press TV reported.
Mohammad Nahavandian said the order had been issued based on a decision by Iran’s National Headquarters for Managing and Fighting the Coronavirus.
The decision comes amid a rising rate of bounced checks in Iran as lockdowns and closures have made it harder to meet financial obligations.
Nahavandian said the move was coordinated with the Iranian Judiciary as courts in the country are the ultimate authority to decide on bounced checks.
“We aim to create a gap so that the situation gets back to normal,” said Nahavandian as he insisted that the increasing number of bouncing checks could affect the broader economy in Iran.
However, the Iranian government has yet to announce a clear timetable for easing COVID-19 restrictions on the economy as the numbers of infections and deaths from the virus have remained high in recent weeks.
Iran has been the hardest-hit country by the virus in the Middle East and is already through a fourth wave of disease since it broke out in late February 2020.
The Iranian Health Ministry said on Sunday that a total of 394 deaths was recorded in hospitals across the country over the past 24 hours as a result of infection with the virus.
It said the daily number of confirmed cases amounted to 18,698 on Sunday afternoon.
IME weekly trade exceeds $400m
The Iran Mercantile Exchange (IME) announced that 686,963 tons of commodities, valued at over $400 million, were traded in its domestic trading and export halls in the week ending April 30.
A total of 320,769 tons of various products, worth over $212 million, were traded on IME’s domestic and export metal and mineral trading hall, ime.co.ir reported on Saturday.
Among the traded products were 261,245 tons of steel, 3,460 tons of copper and 5,300 tons of aluminum ingots as well as 120 tons of molybdenum concentrate, 150 tons of lead and 520 tons of zinc.
In addition, 362,931 tons of various commodities, valued at about $187 million, were traded on IME’s domestic and export oil and petrochemical trading halls.
Among other traded items were 142,940 tons of bitumen, 58,636 tons of polymer products, 38,764 tons of chemical products, 3,620 tons of base oil, and 1,000 tons of sulfur.
The IME was set up in 2007 in accordance with Article 95 of the Law of the Securities Market of the Islamic Republic of Iran following the merger of agricultural and metal stock exchanges of Tehran.
The merger marked a new chapter in Iran’s capital market providing many trading opportunities for customers both in the country and abroad.
It currently offers various services, including serving as the first market providing access to the initial offering of the listed commodities in the IME, price discovery and price-making for Iran’s over-the-counter (OTC) trade, secondary markets and end-users and providing a venue for government sales and purchases as well as a trading platform.
Iran exported nearly $35 billion worth of goods to 143 countries during the year to March 20, said Rouhollah Latifi, the head of the Islamic Republic of Iran Customs Administration on Sunday, IRNA reported.