Central Bank of Iran leashes the FX Market!
– In an attempt to put a cap on recent USD/IRR unrest, Central Bank of Iran offered an anti-fever package to contain the situation over the FX market. Offering 3 short term solutions, the package is to reduce the heat on the market and stabilize the fluctuations:
- IRR certificates of deposits: starting today, Iranian banks are allowed to issue CoDs with an annual yield of 20% for a two week only period. The premature redemption rate would be 14% on those deposits.
- USD based certificates of deposits: Having 1 and 2-year maturity, these CoDs are to be purchased in IRR but reflect the effects of USD. The USD/IRR rate will be calculated based on SANA (Currency Brokers association) 1-month average FX price and the yields would be 4 and 4.5% per annum. The premature redemption rate would be at 10% like short term investment bank deposits.
- Gold Coin Pre-sales: The last item on CBI’s package is for the regulator to auction a pre-sale on gold coins at fixed prices for 6 months (IRR 14,000,000) and 1 year (13,000,000) due dates.
Moreover, a brand new FX trading platform is to be launched from today on, aiming to eliminate street brokers and direct the demand into CBI’s supervision. It is expected for currency exchange houses to come to this platform little by little along with other market players.
– Continuing the stream of Islamic Treasury Bills issuance, today a new ticker of ITBs was to be offered to public on Iran Fara Bourse. TB201 worth IRR 16,000 bn (cUSD 341.88 mn) and has a maturity of 2 years. Unfortunately, the new securities did not price on today’s session mostly due uncertainties over Iran’s Debt Market future following the new directive from CBI (mentioned above). Another piece of government bills, with a value of IRR 8,000 bn (cUSD 170.94) and maturity of 2 years, is next in line for its public offering due tomorrow.
In the Market
Stocks kept their previous week gains intact finishing today’s session little changed. The TEDPIX (+0.08%) eked out its 4th consecutive victory while the IFEX (-0.55%) underperformed and could not hold above 1,100 level.
The majority of names in the Oil Products, Iron Ore and Metals spaces saw a rise in demand in today’s session. The hikes in global prices seem to be the main catalyst behind the positive movement.
The Majlis finally approved companies’ capital raise based on their asset revaluation; the company will also benefit tax exemption in case it is included in Article 141 of the Trade Law; this obliges the ticker to hold an extraordinary general meeting to discuss the continuance or dissolution of the company if its loss surpasses half of its capital. The news resulted in Esfahan Steel facing a buy queue; the company has been planning to raise its capital by 90% based on re-evaluating its assets.
The Majlis directive also positively affected the Automotive space, although not fully held through the closing bell, Iran Khodro, Mashhad Wheel Mfg. and Iran Khodro Diesel went up more than 3%.
Rather balanced trades were done among symbols in the Chemicals industry. 10 mn shares of Iranian Petrochemical Investment worth IRR 14 bn were traded in the retail market. The recently offered share of Shouyande Industry Management has also benefited its shareholders with 35% since February 6th.
Qazvin Sugar adjusted its EPS for the FY ending 21 March 2018 from IRR 500 to IRR 695 based on its 9-month performance; the ticker was halted and will be reopened tomorrow without any domain fluctuation; GGAZ1 settled with slim loss eventually, influenced by the negative sentiment dominating the majority of companies in the Sugar sector.
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