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Analysis: How the Tehran Stock Exchange rally could benefit the Iranian economy

The unprecedented bull run on the Tehran Stock Exchange has been a major boon to Iranian investors, but the upward trajectory is dependent on reforms to attract more liquidity.
Iranian investors monitor an electronic board at the Tehran Stock Exchange, Iran, January 17, 2016. REUTERS/Raheb Homavandi/TIMA ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. FOR EDITORIAL USE ONLY.  - GF20000097697

The Tehran Stock Exchange (TSE) has hit astonishingly new highs in past months, netting a return of above 15% in the week ending Sept. 26 alone — the highest weekly rise in its over half a century of existence. Since the start of the Iranian year on March 21, the TSE index has risen almost 90%, while its average volume of transactions has jumped by more than 400% compared to the same period in the previous Iranian year.

The stock market boom has been mostly due to the record devaluation of the national currency. Indeed, the weakening of the rial has tremendously impacted the revenues of commodity exporting firms, which constitute approximately three-quarters of the TSE market capitalization. The entry of fresh and massive liquidity, the relative positive outlook for global commodity markets, solid quarterly earnings reports and, finally, securities transaction tax cuts are among the reasons behind the continuing TSE benchmark growth.

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