Iran General NewsIran's capital flight breaks record

Iran’s capital flight breaks record

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Iran Focus: Tehran, Iran, Nov. 12 – Capital flight in Iran over the past fortnight reached its highest recorded level since the 1979 Islamic revolution, prompting financial advisors to the hard-line government of President Mahmoud Ahmadinejad to call for a temporary suspension of the Tehran Stock Exchange (TSE), according to market investors. Iran Focus

Tehran, Iran, Nov. 12 – Capital flight in Iran over the past fortnight reached its highest recorded level since the 1979 Islamic revolution, prompting financial advisors to the hard-line government of President Mahmoud Ahmadinejad to call for a temporary suspension of the Tehran Stock Exchange (TSE), according to market investors.

The market flight took a dramatic turn for the worse after Ahmadinejad made a speech in Tehran calling for the destruction of Israel and threatening Iran’s Muslim neighbours that developed ties with the Jewish state, an investor close to the government, who wished to remain anonymous, said.

The hard-line president’s remarks were condemned by the international community, and Tehran received a reprimand by the United Nations Security Council.

The capital flight began in earnest in June, after the election of Mahmoud Ahmadinejad as the new president. Ahmadinejad’s record as a radical Islamist and a former Revolutionary Guards commander, and his reputed remark that “stock exchange speculation is forbidden in Islam” sent jitters through the country’s markets. Nervous investors have been transferring their capital to safe havens such as Dubai in the United Arab Emirates. In the past four months, the Tehran Stock Exchange has lost more than 20 percent of its value.

Ahmadinejad’s recent comments, however, spiked capital flight to an all-time high and there are no indications that the markets would calm down any time soon, the source said.

Meanwhile, the Tehran-based daily Rooz reported on Thursday that representatives of the World Bank told the governor of Iran’s Central Bank that the country’s economy was spiralling out of control.

The free-fall of the stock exchange and investors’ exodus have added to the mounting economic problems facing Ahmadinejad’s government. The hard-line President reportedly told a cabinet meeting last month that “if we were permitted to hang two or three persons, the problems with the stock exchange would be solved for ever”.

In another development, a team of financial analysts close to the government wrote in a confidential report that the only feasible solution to Iran’s economic woes at present was to temporarily suspend activities at the Tehran Stock Exchange, according to Ahmad Sabahi, an Iranian financial analyst based in Dubai.

“We have received word that the [Tehran”> Stock Exchange might halt trading within the next several weeks”, Sabahi said in a telephone interview.

He said the authorities were not implementing the decision to shut down the TSE immediately, so that investors would not draw a correlation between the suspension and the Iranian president’s recent pronouncements.

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