The bloody invasion of Israel by the Iranian-backed Palestinian Hamas has led to a collapse in Iran’s economy, leading to a decline in the rial and a fall in the stock market.
The bloody invasion of Israel by the Iranian-backed Palestinian Hamas has led to a collapse in Iran’s economy, leading to a decline in the rial and a fall in the stock market.
At the start of the trading day on Sunday, the Tehran Stock Exchange (TSE) crashed in just 30 minutes, with almost all stocks traded reporting a sharp decline. The main TSE index closed at 2.1 million points and fell over 51,000 points. The rial began falling slightly late Friday, before the attack, while the fall accelerated on Saturday. While the rial has hovered around 495,000 per US dollar for weeks, it broke through the 500,000 mark on Saturday and fell to 520,000 on Sunday.
The Iranian regime is openly supporting the horror that has resulted in over 2,000 wounded, some 600 dead and dozens of kidnappings when Hamas declared war, and is holding state-sponsored street ceremonies. President Ebrahim Raisi defended the atrocities as “the legitimate defense of the Palestinian nation” and held telephone conversations with Hamas leaders Ismail Haniyeh and Khaled Mashaal.
Regime-sponsored celebrations in Tehran to mark the invasion of Israel by Iran-backed Hamas
The Palestinian Islamist group Hamas surprised Israel with its biggest mass attack in decades, as a barrage of thousands of rockets was followed by an invasion by gunmen on land, sea and air who killed civilians and soldiers and brought hostages back to the Gaza Strip . In southern Israel, armed Hamas fighters were still fighting against Israeli security on Sunday.
Tejarat News, a business website in Tehran, said in an article on Sunday that the rise in exchange rates of foreign currencies against the local currency, the rial, was due to developments in Israel. “Since Saturday, dollar traders have been saying that tensions in Israel are the cause of the dollar’s rise,” the website says.
But the effects of the war were also felt in Israel. Accordingly BloombergIsrael’s stock market also suffered its sharpest decline since March 2020 and the outbreak of the pandemic, while the shekel fell to a seven-year low in recent days, likely to be driven further by the war. Israel also faced one faltering economy amid political instability since the return of the Netanyahu coalition earlier this year, which plunged the country into economic and geopolitical turmoil.
However, the rial has lost 12 times its value since early 2018, when the US withdrew from the JCPOA nuclear deal and imposed tough economic sanctions on Iran. This has made imports significantly more expensive and has led to inflation of around 50 percent for the past three years. Some officials and media in Tehran have warned that persistently high inflation has pushed tens of millions of people into poverty, which in turn has contributed significantly to political instability. The widespread anti-regime protests in 2022 and 2023 are attributed in part to the financial hardship of ordinary citizens. US approval appears necessary for the transfer of such an amount to Iran given the country’s sanctions against the regime’s banking system.
The sudden devaluation of the rial came a few weeks after Iran managed to gain access to its $6 billion in assets blocked in South Korea due to U.S. sanctions as part of a prisoner exchange deal with Washington.
Whenever Iran’s economy is in crisis, regime officials boast about the positive prospects of releasing Iran’s frozen assets abroad while controlling inflation and the free fall of the rial – a propaganda line that never works. This time is no exception. The Revolutionary Guards-affiliated Fars news agency published an article on Sunday in line with Tehran’s damage control efforts, claiming that Iran’s unfrozen assets in South Korea and Luxembourg could have a positive psychological impact on the market.
The Central Bank of Iran (CBI) announced this on Friday Luxembourg has released $1.7 billion of Iran’s frozen funds, following a ruling by the country’s Supreme Court. “This fund is now available to the Central Bank of Iran.” Former CBI governor Abdolnasser Hemmati said in 2020 that the Iranian assets had been released despite an attempt by terror victims to obtain the funds as compensation. In 2012, a New York court found that there was evidence that the Islamic Republic provided al-Qaeda with “material support and resources for acts of terrorism.”
In another case in 2023, a federal judge in New York ordered Iran’s central bank and a European mediator to pay out $1.68 billion to family members of soldiers killed in the 1983 bombing of the U.S. Marine Corps barracks in Lebanon .
The attack has also sparked a wave of criticism of the Biden administration over its deal with Iran and the release of funds that Iran allegedly funnels to its proxies.
In May, Iran International reported that Hamas had pressured the Islamic Republic to invite its leader Ismail Haniyeh to Tehran in the hope of receiving financial support. According to our sources, the Islamic Republic continues to provide financial assistance to Hamas despite its own economic situation, but Tehran is not satisfied with the group’s performance against Israel.
While Hezbollah is by far Iran’s richest and most powerful proxy, the combined resources of the Palestinian Islamic Jihad movement, Hamas and the Popular Front for the Liberation of Palestine are enormous, with Hamas and Islamic Jihad receiving a large portion of Tehran’s aid. In March 2022, Haniyeh announced that the The Islamic Republic paid a total of $70 million to Hamas to help it develop missiles and defense systems. During an interview with Al-Jazeera, Haniyeh said various countries would help finance the group, but Iran was the largest donor.
In 2018, US President Donald Trump’s special Middle East envoy Jason Greenblatt, who recently visited Israeli communities in the Gaza Strip and toured the terror tunnel blown up by the IDF, claimed that Iran had provided $100 million a year to Hamas compared to $700 million a year to Hezbollah.
In a video posted on Sunday on the official Telegram channel of the Al-Qassem Brigades – Hamas’s military wing – spokesman Abu Obaidah said: “We thank the Islamic Republic of Iran for providing us with weapons, money and other equipment . He gave.” We used rockets to destroy Zionist strongholds and helped ourselves with standard anti-tank missiles.
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