EghtesadOnline: Stocks sold off on Tuesday for a second session as investors digested the negative effects of the drop in foreign exchange rates. This comes as some analysts warn that the herd behavior of investors in response to forex fluctuations is not backed by fundamental reasons due to the multiple exchange rate system.
Since foreign exchange volatility last year led to the rial's steep fall, export-based companies have seen better revenues which has endeared their shares to investors.
The main gauge on Tehran Stock Exchange lost 1,644 points or 1% at Tuesday's session with the index closing at 162,593.6.
Foreign exchange rates dropped below the psychological level of 130,000 rials on Monday as markets braced for relative stability before the fiscal year is out on March 20, according to Financial Tribune.
However that trend reversed on Tuesday with the exchange rate surging back above the 130,000-rial level. Gold prices also rose again with the benchmark Bahar Azdai gold coin traded for 45 million rials. The coin was up 2.25% compared with the previous day.
National Iranian Copper Industries Company, Omid Investment Management Company and Golgohar Industrial and Mineral Company had the biggest negative impact on the main index on Tuesday.
The junior market Iran Fara Bourse also lost heavily on Tuesday with the benchmark index IFX shedding 26 points or 1.24%.
Governor of the Central Bank of Iran Abdolnaser Hemmati said at the beginning of the week that forex rates in the open market would decline because imports at healthy levels simply will not make economical sense for traders.
He ascribed the recent hike in forex rates to negative reports about the possibility of the Expediency Council rejecting the Financial Action Task Force-related bills. The council is in charge of resolving disputes between the Guardians Council and Majlis.
Other reasons for the recent hike, he said, were increase in demand for hard currency at yearend and some government policies that encourage imports.