Al-Monitor | Navid Kalhor: 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 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.

But for the stock exchange market to see more investment inflow, certain pre-conditions must be met. Failure to fulfill them will set the stage for a dramatic sell-off, despite the dramatic hike.

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