DUBAI, April 4 (Reuters) - Iran’s currency and stock market rose on their first day of trade since Tehran agreed with world powers on its disputed nuclear plans, but the moderate size of the gains showed investors do not expect an immediate recovery of the economy.
The rial climbed about 2 percent in free market trade to 32,350 against the U.S. dollar on Saturday, remaining within the range of the last several months, according to Iranian currency trading websites.
The Tehran Stock Exchange’s main index gained 3.1 percent to its highest level in over two months.
The agreement on curbing Iran’s nuclear programme, reached on Thursday, will - if confirmed in a final deal by a June 30 deadline - begin to ease crippling economic sanctions on Iran. This could ignite a boom and clear the way for tens of billions of dollars of fresh trade and investment.
But while the announcement of the deal said sanctions would be lifted gradually, it gave no timetable; analysts think the process could take years, and Iran’s oil exports would probably not start recovering until 2016. This could mean the immediate boost to the economy from a final nuclear deal would be modest.
Iran’s IRNA state news agency said there was speculation in the currency market that the rial could rise beyond 30,000 to the dollar as a final agreement by the June 30 deadline approached.
The prospect of a final deal could encourage the public to start releasing into the market large amounts of hard currency - perhaps billions of dollars - which it hoarded during the sanctions era.
However, the Iranian central bank has already indicated it does not want any sharp rial appreciation as that could hurt Iranian exporters.
Central bank governor Valiollah Seif signalled this again after the nuclear deal. While the central bank will not interfere with currency rates, it does not expect a dramatic shift in the rial’s value, the semi-official Mehr news agency quoted him as saying on Saturday.
“In the last year we witnessed relative stability in the bazaar, and so we should let the appropriate currency rate set itself according to economic conditions,” he said.
Seif also said the bank had a long-term plan to rebase the rial by knocking a zero off its exchange rate, but not before inflation reached acceptable levels.
He did not specify what level would be acceptable. Annual inflation was 15.6 percent in the Iranian month that ended on March 20, down from rates of over 40 percent in 2013, the central bank said on Friday. (Editing by Andrew Torchia)