Deposit rates down stock market in Iran amid nuke deal

Deposit rates down stock market in Iran amid nuke deal

Baku, Azerbaijan, Dec. 28

By Farhad Daneshvar - Trend:

High deposit interest rates, unstable political conditions in the region and the world as well as sharp decline in oil prices are among the main reasons behind economic recession in Iran, an Iranian financial analyst believes.

"Iranian banks offer high interest rates for cash deposits which poses a low level of risk for depositors. Therefore the investors prefer to keep money in bank accounts rather than taking the risk of investing in stock market," Hossein Khezli-Kharazi told Trend Dec. 28.

If the political situation in the world and with the oil prices remain stable, once the West lifts the sanctions, it will take at least six months for Iranian companies and stock market to benefit, Khezli-Kharazi added.

While in preparation for the lifting of international sanctions on Iran's economy, many people and companies express hope for reaping fat profits, the country's stock market is still tough for investors to pick profitable stocks.

Following a July nuclear deal with the world powers, Iran expects the international sanctions imposed by the West on its financial and industrial sectors to be lifted in early 2016.

However, Khezli-Kharazi believes that the removal of sanctions is not the only factor affecting the country's stock market as Iran's economy depends too heavily on oil. Therefore a further plunge in oil prices will definitely impact the country's economy.

Media reports on 27 December suggested that the price of the country's heavy crude oil had plunged to below $30 per barrel for the first time in almost 20 years.

According to the reports Tehran sold heavy crude at $29.4 per barrel in the week ending 18 December, while selling light crude at $35.1 per barrel over the same period.

International Monetary Fund (IMF) released a report on Dec.21, saying that Iran's GDP growth is expected to be between 0.5 to -0.5 percent in current year.

While higher oil production, lower costs for trade and financial transactions, and restored access to foreign assets, are expected to lift real GDP to about 4-5.5 percent next year.

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