At last, the Fed raised its key interest rate for the first time in almost a decade. Most financial and investment gurus ponder this move a nonsense act considering the state of world economy and markets. One major effect of this rate hike is strengthening the US dollar in opposition of other currencies as well as commodities, which are mostly priced based on USD. It can be seen in almost all sectors, as commodity prices are lowering as long as the Fed decided to go hawkish by fading its QE convenience, to the point it raised the interest rate.
Oil and oil based commodities are traded in lowest prices for at least a decade throughout all markets; base metals are under heavy downward pressures from all fronts. Even countries like Australia and Canada, nations that are highly integrated to international markets, are experiencing difficulties managing their economy, but the most critical cases are under-developed and developing nations relying on commodity exporting revenues to operate their economies. The implications have been much lower revenues for oil producing countries, including Iran which might well translate to strong stagnating forces.
Many oil dependent nations, are struggling to fulfill their budget promises, while under pressure from both inflation and recession fronts. However, Iran has experienced a robust monetary and fiscal position during this oil slump, having defended the domestic currency successfully, the economy has experience a positive GDP growth rate. This situation can be explicated as powerful deep-rooted fundamentals including diversity, rich infrastructures, and societal and cultural stabilities, features are rarely seeable in oil-exporting countries. Moreover, Irans dependable internal market and its excellent access to neighbor countries, along with other solidarity measures mentioned before, have made the country a potential economic powerhouse in the region.
Oil prices which are now in as almost one-third of their highs in more than a year, and the nuclear deal which has not turned into practical lifting of sanctions yet, suggest the currency should have been under extreme devaluing forces and the GDP must have been in negative growth territory. Nonetheless, in real practice, none of those has happened. Even in the years of heavy sanctions, there was no such crisis as Venezuela in current time and Turkey’s 2001. Considering long term trends, Iranian Rial has not been an unstable currency, while even occasional declines in value were well compensated with medium-term spans of steadiness. Unlike many developing countries some of them are highly praised, Iran has not experienced even a single instance of erasing zeros from the national currency.