While international businesses are waiting to see what will emerge from the nuclear talks in Vienna, Iran’s business community remains more optimistic about the outcome of the negotiations, though, in its own right, the country’s private sector is also in a wait-and-see mode.

There are a number of ways to gauge the expectations and perceptions of the Iranian business community, but the movements in the free market value of the US dollar are usually an accurate reflection of the overall trends. A closer look at the fluctuations of the free market exchange rate (graph below) in the past few months indicates that there is no anxiety in the hard currency market, and by extension, within the business community. Essentially, despite an inflationary environment, the Iranian rial has roughly maintained the same value that it had in September 2013, before the signing of the interim nuclear deal in Geneva.

The slight upward trend of the past three months can also be explained through two factors: the falling oil prices and the devaluation of the euro against the US dollar, which, as an important portion of Iran’s currency basket, relates to the euro as a reference currency. In fact, the country’s official exchange rate also experienced a devaluation by about 5% in the past few months and now stands at 26,789 rials to the US dollar. Going back to before the June 2013 presidential elections, one could clearly identify the anxieties of the business community in the fact that the free market rate of the US dollar went as high as 40,000 rials — 3.5 times that of the official exchange rate of 11,000 rials.

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