Overview: Iran Analysis Weekly Report Nov 27, 2016
27 Nov., 2016
Vistar Business Monitor
Supreme Leader Ayatollah Ali Khamenei warned that renewing the Iran Sanctions Act would “certainly” violate the nuclear deal. He added that Iran will “certainly respond” to a renewal of the Iran Sanctions Act (ISA). He also accused the U.S. of using the nuclear deal “as a tool to apply pressure on Iran.” Mr. Khamenei has previously warned that the U.S. is failing to honor its commitments under the nuclear deal without stating that Iran will withdraw from the accord, however. The ISA authorizes energy, banking, and defense sanctions over Iran’s missile and nuclear activities and is set to expire at the end of the year. The U.S. House of Representatives voted for a “clean” ten-year renewal the ISA on November 15 by a vote of 419 to 1. The Senate is expected to vote on the renewal before adjourning in December. Supporters of the legislation claim that renewing the ISA will protect the U.S. government’s ability to impose “snapback sanctions” if Iran violates the nuclear deal. The White House has not signaled that it will veto the legislation.
Iran transferred “some quantities” of its excess heavy water to Oman following international warnings to meet its nuclear deal commitments. The International Atomic Energy Agency (IAEA) reported earlier this month that Iran had exceeded its heavy water stockpile of 130 tons permitted under the nuclear deal for the second time since the implementation of the deal. In response, Atomic Energy Organization of Iran (AEOI) Spokesman Behrouz Kamalvandi announced on November 20 that Iran has transferred “some quantities” of its surplus heavy water to Oman.
President Hassan Rouhani called for an investigation into the cancellation of a speech by outspoken moderate-conservative Deputy Parliament Speaker Ali Motahari in a letter to the Interior Ministry and the Judiciary on November 21. Rouhani added that the cancellation is a “source of shame” and accused those responsible of restricting speech and seeking “extremism and the polarization of society.” Motahari, who is also a member of the reformist-backed Hope parliamentary faction, was scheduled to deliver a speech in Mashhad, Razavi Khorasan province, on November 20.
Also Parliament Speaker Ali Larijani criticized the Mashhad city prosecutor’s cancellation of a speech by outspoken Deputy Parliament Speaker Ali Motahari. Motahari, who is also a member of the reformist-backed Hope parliamentary faction, was scheduled to deliver a speech in Mashhad, Razavi Khorasan province on November 20. The city prosecutor reportedly ordered security forces to cancel the speech, however, and sealed the reformists’ local office.
The average goods and services Consumer Price Index for urban areas in the 12 months ending November 20, which marks the end of the Iranian calendar month of Aban, increased 8.6% compared with last year’s corresponding period, according to the latest report released by the Central Bank of Iran. The CBI put the inflation rate for the preceding month (Mehr), which ended October 21, at 8.7%. The overall CPI (using Iranian fiscal year to March 2012 as base year) stood at 249.5 in Aban, indicating 0.6% growth compared with the previous month. The index registered a year-on-year increase of 9.1% compared with the similar month last year. The CBI report came after the Statistical Center of Iran put Aban inflation at 7.5%.
Oil Minister Bijan Zanganeh met with OPEC Secretary General Mohammed Barkindo in Tehran to discuss the preliminary agreement reached in Algeria on freezing OPEC’s oil output. The preliminary agreement did not include specific production quotas for member states, which raised serious questions over its viability. During a press conference with Barkindo, Zanganeh claimed that OPEC will likely reach a consensus over individual cuts during OPEC’s meeting in Vienna next week. Zanganeh also called the price range of $55-60 per barrel of oil “fair.”
Central Bank of Iran reported that banks paid 2,785 thousand billion rials of loans to the economic sectors during the first seven months of Iranian calendar year which is 49.6 percent more than similar period of last year. Over 65 percent of total facilities were paid in form of working capital.
Crude Oil prices traded higher last week, but the strong upside bias from earlier in the week has slowed considerably as investors express uncertainty over whether OPEC will be able to agree to production cuts at next week’s meeting in Vienna on Wednesday. The price of OPEC basket of thirteen crudes stood at $45.22 a barrel on Thursday, compared with $42.83 the previous week, according to OPEC Secretariat calculations.
During this week, the TSE stayed away from excitements of the US presidential election and experienced a calm positive trend. However, there are varying opinions about Donald Trump’s presidency and how it could affect the world’s economy. The appreciation of the greenback and global drop of gold price are among the most important issues. Increase in Renault’s sales to Iran as well as finalizing the airbus acquirement were among the most significant news of the week for domestic and foreign investors.
The US dollar is continuing its post-Trump rally in the Tehran market, further throwing into uncertainty Central Bank of Iran pledge to unify foreign exchange rates by March 2017. The greenback sold for 37,430 rials on Thursday. The currency last week crossed the psychological threshold of 37,000 rials. The official exchange rate, set by the Central Bank of Iran, was 32,070 on Thursday almost unchanged from the previous day’s close. The surge in forex rates was not limited to the US dollar as the rial saw notable depreciation against a basket of major currencies on the fifth day of the Iranian trade week.