Iranian markets reacted positively to the outcome of the second round of snap elections held on July 5, which saw Masoud Pezeshkian emerge as the victor with 53.7% of the votes, becoming the 14th President of Iran.

According to the final tally released by the election committee, the election saw a voter turnout of 30,530,157, with Pezeshkian garnering 16,384,403 votes. His main rival, Saeed Jalili, received 13,538,179 votes, accounting for 44.3% of the total, while spoiled ballots constituted 2%.

The election commenced at 8 AM on July 5 and continued until midnight. Pezeshkian's victory represents an increase from the previous round, where he had secured over 10,415,000 votes with a 39.9% turnout. The overall participation rate in the final round stood at 49.75%, with 30,573,931 ballots cast out of 61,452,351 eligible voters.

Market Reactions

Pezeshkian's win has alleviated market worries, setting a positive note for both the stock and currency markets in the short term for many traders.

The Tehran Stock Exchange (TSE) experienced a surge at the start of trade, with the main index, TEDPIX, rising by 71,033 points (3.28%) to 1,171,703 points on July 6 or 3.5%.

Despite economic debates held by the presidential candidates two days prior to the election, which failed to provide clear economic plans, market expectations of a Pezeshkian victory reduced investor caution. However, the market had recorded significant capital outflows over the past few trading sessions.

The stock market has been experiencing successive declines in recent years, mainly due to the unsupportive policies of the previous administration over the market’s mechanisms and listed companies’ activities.

 The lifting of the restrictions on the price spread of the market in the last week is also a key contributing factor behind the recent growth in the market.

In addition to the stock market rally, the trade value of gold funds in the capital market continued its upward trend, having grown by 30% in the days leading up to the election, buoyed by positive net capital inflows.

Currency and Gold Markets

The immediate reaction to the election results was evident in the price of Tether (USDT), which initially dropped by about 7% following the announcement. By the morning of July 6, Tether's price had stabilised to only 2% lower than the previous day's close.

Nobitex, a popular Iranian exchange, priced each USDT at IRR 579,300, down 3.67% on the previous day’s close.

Historical data indicates that the dollar in Tehran typically undergoes a correction in the week following presidential elections, often remaining in a recessionary trend for about a month. The currency market calmed, with significant price declines noted.

The dirham experienced the most substantial drop at 1.71%, while the US dollar saw a 3% decrease, being sold at IRR 597,000 on July 6.

Gold bullion prices declined in the early hours following Pezeshkian's victory, with Emami gold bullion losing 1.93% during the day.