The reaction of the head of the Central Bank to the fall of the stock market / the withdrawal of the government from the previous policy?

According to Tejarat News, just in the days when many experts predicted that the total stock index would soon enter the channel of 1.6 million units, the downward trend of the stock market began. The possibility of starting negotiations and the possibility of a fall in the price of the dollar was just one of the reasons for the index’s decline. But many experts believe that the government is still involved in the recent stock market crash.

That the government has offered government bonds at high rates to compensate for its budget deficit and has given the same negative signal to the stock exchange. But now the governor of the central bank has said in his last words: “We have no plans to increase the interest rate on government bonds. “A total of 43,000 billion tomans of government bonds have been sold in the interbank market, and the rate increase in the past has been two tenths of a percent.”

Government withdrawal from bond sales

This statement was made by Ali Salehabadi in a special news talk show, while since last month, many experts have stated that the government’s footprint is evident in the continuous decline of the overall index.

Abdullah Meshkani, a stock market expert, wrote on his personal Instagram page: “The result of selling bonds at high rates or higher interest rates that banks charge in the name of interest on the account is the cause of the decline in the overall stock market index.”

According to the stock exchange expert, the government has not officially increased the rate of government bonds, but banks are paying more interest on these bonds, and the interest paid is in the form of interest on account. But it has a negative impact on the stock market and shareholder assets.

“At the same time, Dehghan Dehnavi, the former head of the Exchange Organization, said that during the first three weeks of October, the government did not sell any securities in the market and did not plan to sell them for the next week.” But the problem is that the main government is facing a severe budget deficit, and the government’s solution to cover this deficit is either to borrow from the central bank or to issue government bonds.

Statistics and reports show that the previous government had resorted to both ways to cover the budget deficit, and the new government probably has no other choice. Mehdi Samavati, a stock market expert, also wrote on his personal page on Instagram: “Can the head of the stock exchange organization stop 30,000 billion tomans of government bond sales?”

Scholarship support with occupational therapy

In other words, it seemed that the head of the stock exchange organization could not prevent the sale of government bonds. But now, in his latest remarks, the governor of the Central Bank has raised the issue of government support for the stock market, saying that the government’s goal is not to increase interest rates on government bonds. Because it does not want to harm the capital market.

But as the Parliamentary Research Center has announced, this year’s government budget deficit is 300,000 billion tomans. Oil sales have declined and foreign exchange resources are limited. But in the face of current spending, the government remains strong, and the government must find a way to make up for this deficit.

That is, it must either borrow from the central bank and increase inflation, or provide incentives to sell government bonds to the public in order to cover part of its budget deficit. Incentives such as raising bond interest rates.

Although this is to the detriment of stockholders, it seems to be a better solution and its negative effects on the economy are not quickly apparent. That is why it seems that the government intends to put government bonds on the market, and for this reason, the statements of Salehabadi and even Ebrahim Raisi in support of the stock exchange are a kind of professional therapy.

Like the government’s approach to currency, which has repeatedly tried to control the market with some promising statements. This time, too, it seems that the government wants to prevent a further decline in the overall index with these statements. Because the overall index is on the verge of a new channel, and now there is concern that if the channel index loses 1.3 million units, a new wave of capital outflow will begin or not.

But these are not the only statements of Salehabadi in support of the stock exchange. He said that the interaction between the central bank and the capital market will continue to maintain the balance of the capital market and the payment of loans to brokerages will continue, provided that it does not harm production.

Salehabadi mentioned another program to support the stock market and said that another policy to support the stock market is to provide capital to banks and banks can help the capital market in this way.