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The value of the Iranian currency has risen more than 15 percent against the US dollar, and its stock market has hit record highs after the agreement reached between the United States and Iran on Sunday.
However, Iranians who have been suffering for years due to inflation and high economic costs have found little economic relief as the prices of basic commodities, such as food, remain high despite the country’s successes.
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Iran’s economy has been crippled by decades of US occupation. The economic crisis worsened after the US and Israel launched a war against Iran on February 28. Later, the US blockade of Iranian ports further increased the Iranian people’s grief.
In Ferdowsi Street, the strike of Tehran’s foreign market, what happened on Thursday was a departure from the panic of recent months. Bureau of exchange boards highlighted the fast-changing numbers as foreign currencies, led by the dollar, fell sharply.
“We closed our doors a few hours before the US-Iran deal was announced at a price of 1.8 million rials to the dollar,” Amir, a 35-year-old office worker who asked not to be identified, told Al Jazeera. “Now it is down to 1.54 million rials, and we expect further declines.”
Amir saw a significant increase in sales even though buyers remained scarce as many expected the rial to strengthen, which could drop to 1.4 million to the dollar or lower.
Recent gains show a significant improvement. After the war, the interest rate rose to a record high of 1.9 million rials (190,000 tomans) to the dollar in March before settling at around 1.685 million before the latest attacks even ended.
Cutting through grocery aisles
Despite the recovery of the rial, a walk through Tehran’s shopping malls reveals a starkly different reality. For Iranians who are struggling with economic collapse due to sanctions relief and the US military blockade, the end of diplomacy has not yet reduced the cost of living.
Reza, a 42-year-old resident of Tehran, told Al Jazeera that the prices of daily commodities such as milk, cheese, cooking oil and flour do not change. “They say the dollar is down, but my shopping basket is the same as last week,” he said. “This means that the contract has not reached our pockets yet.”
From behind the cash register, 55-year-old shop owner Ramin echoed his customer’s frustration. He explained that although the government continues to distribute subsidized goods such as bread, the fluctuation of the free dollar does not immediately affect food prices.
The value of the dollar in the free market differs from the official exchange.
Pointing to a shelf of imported goods, shopkeeper Karim said that items such as shampoo, toothpaste and laundry detergent were still locked away at high prices.
“Sellers say they bought these products two months ago at old dollar prices,” Karim said. “Prices will remain high until old stocks run out and new ones come in at lower prices.” He added that it could take two weeks for the market to adjust, meaning Iranians will continue to face inflation in the short term.
Euphoria at the mall
While Main Street is struggling, Tehran’s stock market is facing an unprecedented crisis amid hopes of economic reform. The stock market has been green since the first leaks of the Washington-Tehran deal came to light.
On Monday, the major index jumped and broke 161,000 points in one session, indicating a huge influx of money from individual investors.
By Tuesday, the market continued its remarkable rally, rising again 112,000 points to cross the emotional barrier of 5 million, and settle at the historical record of 5.1 million.
Saeed, a 40-year-old investor, called it “a remarkable day”. He added that investors are rushing to buy shares in the energy and petrochemical sectors, betting heavily on the resumption of exports and the reopening of global markets.
However, Saeed remained optimistic. “The stock market is often driven by rumours,” he warned. “I don’t want to repeat what happened in the nuclear deal of 2015 when the market rose and fell after the US withdrawal.”
He also refers to US President Donald Trump’s withdrawal from the deal in 2018, when Iran agreed to curbs on its nuclear program in exchange for sanctions.
Home appliances and electronics
The wait-and-see approach has hindered other sectors of the economy. In the heart of Tehran’s electronics sector, 38-year-old shop owner Reza said that although the prices of imported goods have fallen by the dollar, sales have stopped because customers are waiting for big discounts.
A similar cold snap has hit the housing market. Nasrin, a 36-year-old real estate agent in northern Tehran, noted that recent price increases associated with the initial risk have now been replaced. Many homeowners are still clinging to higher prices, seemingly unaware that the market has changed, causing property sales to stagnate.
‘It’s not a magic wand’
For macroeconomic experts, the indicators of the mixed market are fully expected. Hossein Selahvarzi, former head of Iran’s Chamber of Commerce, Industries, Mines and Agriculture, warned that the new agreement “is not a magic bullet” that can immediately fix years of economic problems.
Although the war took a heavy toll on Iran’s arsenal, Selahvarzi emphasized that the roots of the country’s economic woes were planted well before the bombing.
“War is the enemy of money, production, trade and human well-being,” Selahvarzi told Al Jazeera. He warned of the fallacy of the research to believe that the peace memorial alone can revive the economy.
“The end of the armed conflict does not mean the beginning of the economy,” he said, stressing that the restoration of business stability is a priority for the country.
“What we have before us is a limited and fragile opportunity to fix the road and rebuild the economy, and this opportunity can be quickly lost if it doesn’t go well.”
