The Iranian rial reached a record low against the US dollar on the first working day of the Persian year 1404, with the greenback trading at IRR1,030,000 on Ferdowsi Street, while the Tehran Stock Exchange's main index gained 17,585 points to reach 2,727,673 points, Shargh and Mehr News Agency reported on March 25.

The dollar exchange rate surged 5% compared to the final trading sessions of the previous year, marking a significant depreciation of the national currency as markets reopened after the Nowruz holiday period. Simultaneously, the euro experienced a similar increase, reaching IRR1,120,000 in Tehran's unofficial exchange markets. Over the holidays, people have had a week to discuss the poor state of the economy during the holiday season, and the increase in the dollar is due to pent-up demand as word spread of the poor state of the rial.

Despite the currency depreciation, the stock market's main index began trading with a significant increase after having dropped by 34,000 points to 2.7mn points on the last working day of the previous year. The equal-weighted index also rose by 2,443 points to reach 797,720 points.

Banking, basic metals, and automotive sectors were the top-performing industries in terms of trading value with IRR1.44bn, IRR570mn and IRR390mn respectively. Fmelli, Vmellat and Shepadis symbols had the most positive impact on the main index.

The sharp currency depreciation comes amid ongoing economic challenges facing Iran, including international sanctions, high inflation and growing economic uncertainty. Meanwhile, the new design Bahar Azadi gold coin was trading at IRR970mn ($942) in Tehran's open market.

Market indices today were influenced by IRR2.31bn inflow of liquidity and IRR5.15bn outflow from fixed-income funds, with retail trading value at IRR11.06bn, buy queues forming in 132 symbols totalling IRR13.59bn, and sell queues in 83 symbols totalling IRR2.76bn.

Analysts point to increasing geopolitical tensions and the potential for additional international pressure as contributing factors to the currency's dramatic weakening at the start of the new Persian fiscal year.