Iran: Rial Recovers, Stocks Surge, but Public Still Struggles with Prices

Iran’s rial has strengthened more than 15% against the US dollar and the country’s stock market set a new record after a memorandum was signed between the U.S. and Iran on May 25. Yet many Iranians say they have not yet felt any improvement in living costs after years of high inflation and currency devaluation.

In the Ferdowsi district, Tehran’s foreign exchange hub, exchange rate boards constantly changed as the dollar fell sharply. Amir, 35, an employee at a currency exchange office, said just hours before the agreement was announced, the rate was 1.8 million rials to the dollar. ‘Now it has dropped to 1.54 million rials, and we expect it to fall further.’

Although trading volume has increased significantly, buyers are scarce because many believe the rial will continue to strengthen. This rally follows a historic peak of 1.9 million rials to the dollar in March after the war broke out.

Food prices still high

Despite the rial’s recovery, grocery shopping in Tehran tells a different story. Reza, a 42-year-old resident, said prices for milk, cheese, cooking oil, and flour remain unchanged. ‘They say the dollar is down, but my shopping basket is as expensive as last week. That means the deal hasn’t reached our pockets yet.’

Ramin, 55, a grocery store owner, explained that while the government still subsidizes some items like bread, fluctuations in the free-market dollar rate have not immediately impacted basic food prices. Another shopkeeper, Karim, pointed to shelves of imported goods: ‘Distributors say they bought these two months ago at the old rate. Prices will stay high until old stock clears and new stock arrives at a lower rate.’ He estimates the market needs at least two weeks to adjust.

Stock market boom

In contrast to the shopping streets, the Tehran stock market is experiencing an unprecedented boom. On May 26, the main index surged a record 161,000 points in a single session, marking the highest inflow of individual investor money in history. On May 27, the market added another 112,000 points, breaking the psychological 5-million-point barrier and closing at an all-time high of 5.1 million points.

Saeed, a 40-year-old investor, called it a ‘historic day’ as investors rushed to buy energy and petrochemical stocks, betting on a resumption of exports. However, he remains cautious: ‘The stock market is often driven by rumors. I don’t want to repeat the experience of the 2015 nuclear deal, when the market soared and then collapsed after the U.S. withdrew.’

Real estate and electronics in freeze

At electronics centers in central Tehran, Reza, a 38-year-old shop owner, said the prices of imported goods have fallen in line with the dollar’s decline, but sales have stalled because customers are waiting for further drops. The housing market is also frozen. Nasrin, a 36-year-old real estate agent, noted that many homeowners are still holding high prices despite the market shift, paralyzing transactions.

Experts warn

Hossein Selahvarzi, former head of the Iran Chamber of Commerce, Industries, Mines and Agriculture, warned that the new agreement is ‘not a magic wand’ that can instantly solve the structural problems of the economy. He stressed that the war has destroyed infrastructure, but the roots of the economic crisis existed before the bombing began.

‘War is the enemy of investment, production, trade, and public welfare. Ending military confrontation does not necessarily mean economic prosperity. Ahead of us lies a limited and fragile opportunity to adjust and rebuild the economy, and this opportunity could quickly be lost if not managed properly,’ Mr. Selahvarzi said.