In the last months or better weeks Irans currency has ground rocketed in a way that it lost more than two thirds of its value. And on the other side the house prices have gained about 50% value as more and more people which have money, invest their money in apartments. Whats going on? The country shall be big enough to be at least a little bit stable?
Pressure from outside
The outside view is pretty clear as the sanctions let everyone sell Iranian Rial as fast as possible and no one wants to have and held this currency. And with becoming less for oil and paying more for all other materials means an increase of prices for the affected goods. This shall be pretty clear for imported goods. But the situation is that all prices increase in Iran by sheer sky rocking. The bread or tomatoes as well as the soap and the milk triple the prices. As I understand completely the impact of external goods this cannot be the explanation for domestic products. How come that bread is tripling its prices? What exactly makes the pricing of the goods?
Really only outside?
And as an also very interesting effect we have now an increase in the departure fee. This is very surprising as the fee is not depending on the prices of flights or anything else. It is implemented in the administrative act of departing from Iran for Iranians. So there is stabiloity given by purpose.
Internal aspects breaking through
So what is the reason behind? I guess the same as with all other goods not depending from oil or external goods. Some see a chance to increase prices with a very good explanation and the Iranian government is not willing or right now not intended to act against this. But the effects of increasing prices, further reducing economic strength and increasing house prices make people poorer and more dissatisfied. I have no clue who has which stakes in there and sees some usage for himself, but for sure this dissatisfaction will not help the modelling power behind. It will just make Iranian poorer and further reduce economic power and thus willingness of the people to work and develop.
Crossing the fingers for future and
Stay tuned
Yours K-Street6 Team