Monetary and Banking Research Institute
Date:7/2/2018 10:34:06 AM   |   Code : 293750
Recent Currency Jump; Fundamental or Bubble?
Dr. Ali Divandari and Dr. Hamid Zamanzadeh:
Recent Currency Jump; Fundamental or Bubble?
 

“Foreign exchange market had been relatively experiencing stability after the fluctuations during 2011-2013 as well as from the 11th presidential election till mid-2017, but fluctuations reappeared in the market during the last winter and spring 2018.”, stated in a policy note on analyzing the currency situation in the Iranian economy by Dr. Ali Divandari and Dr. Hamid Zamanzadeh, respectively as the chairman and deputy chairman of the Monetary and Banking Research Institute (MBRI).

According to the Public Relations department of the Monetary and Banking Research Institute (MBRI), the authors highlighted: “The question which bears in mind would be whether the jump is a fundamental phenomenon or we are observing a currency bubble in the Iranian economy. To answer this question, analyzing the fundamental variables determining the foreign exchange rate would be required, on the one side as well as the quantitative estimation of fundamental foreign exchange rate based on an econometric approach is necessary, on the other side.”

 

Regarding the key factors determining currency fluctuations, Dr. Divandari and Dr. Zamanzadeh continued: “Domestic economic factors, external pressures as well as the U.S. exit from the Joint Comprehensive Plan of Action (JCPOA), evaluating the fundamental foreign exchange rate and currency bubble in line with mechanism and currency bubble depletion period are regarded as the key elements in analyzing and evaluating the currency fluctuations in the market.”

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