Currency fluctuations are a deadly poison for businesses
Vice President of the Monetary and Capital Commission of the Chamber of Commerce: Stock companies that have foreign exchange earnings from the export of their products or the prices of their products are determined by the prices of world markets, are more affected by the exchange rate and companies whose raw materials are imported. It has a negative effect.
According to the International Exhibition of Iranian Stone, Abbas Argon said about the possible effects of exchange rate fluctuations on the capital market: the capital market is affected by the exchange rate, world market prices, domestic policies and foreign policy. This year, with the arrival of a large volume of liquidity in the capital market and new investors, it caused the unprecedented growth of the stock market index.
He continued: "It should be noted that the increase in the exchange rate will increase inflation in the country." As a result of this inflation, the accounting profits of the companies increase on the one hand and the replacement value of the companies increases on the other hand, and as a result, the growth of the value of the companies' shares on the stock exchange.
Argonne added that listed companies that have foreign exchange earnings from exporting their manufactured goods or whose commodity prices are determined by global market prices are more affected by the exchange rate and also have a negative impact on companies whose raw materials are imported.
"The exchange rate is one of the most important economic variables that has fluctuated a lot in recent years, and this fluctuation is a deadly poison for businesses because it has destabilized the financial markets and planned to continue operating It deprives them, as a result of which exchange rate fluctuations directly affect the capital market.
Regarding the impact of non-bank foreign exchange services on the foreign exchange market, Argon said: "It doesn't seem to have a significant impact because we need to strengthen the foreign exchange supply sector to meet demand to prevent exchange rate growth, if not by non-bank exchanges." It can affect the foreign exchange market.
* ILNA
