What effect does the dollar price have on the stock market?
According to Tejarat News, with the beginning of the 13th government, the negotiations to revive the JCPOA also started, but it was stopped in the middle of the way and in the winter of last year. These talks were held in Doha after a three-month standstill and with the mediation of Qatar, but they remained fruitless. Finally, on the 12th of August, Ali Bagheri Keni, the head of Iran’s negotiating team, left for Vienna.
A few days had passed since Bagheri’s visit to Vienna, when foreign media claimed that the European Union had presented the final text of the agreement. At the same time, Josep Burrell, the European Union’s foreign policy official, announced that the final text of the agreement has been prepared and now is the time for a political decision.
This is while the final text of the agreement, which is said to have been prepared, has not yet been provided to Iran. On the other hand, the western parties claim that Iran has no right to interfere, modify and negotiate in the final text of the agreement. This statement is against the principles of negotiation.
Despite these different and contradictory news, the price of the dollar in the free market has started to rise again. Some economic experts are of the opinion that if more negative news from the negotiations is reported, the price of this currency in the free market can fluctuate.
Does the increase in the price of the dollar make the stock market bullish?
On the other hand, with the announcement of positive news, the free market dollar price decreases. The main point here is that stock exchange companies trade at half dollar price and this free market dollar price emotionally affects transactions.
Exchange companies follow the value of the dollar and somehow the increase in the price of the dollar in the open market is related to the stock exchange. But when the price of the free market dollar increases, some people in the capital market also react in a volatile and emotional way. Finally, with the increase in the price of the dollar in the open market, the stock market also grows temporarily.
Of course, this growth can be in the range of a few hours to a few days, and after the market, it returns to its real state.
The dollar price fluctuates due to JCPOA negotiations. If the negotiations end with an agreement, we expect its price to decrease and eventually the stock market will rise in the long term. But if the negotiations do not end in an agreement, the price of the dollar will increase. Finally, the stock market also grows in an inflationary way.
In any case, the stock market has the potential to grow, but with the agreement, the growth of this market will be real.