Is the Canadian Dollar’s Surge Against the Toman a Sign of Economic Instability?
Tuesday 18 Feb 2025The Canadian Dollar Soars Against the Toman: What's Driving the Surge? Over the past 30 days, the Canadian dollar (CAD) has seen a sharp increase against the Iranian toman, rising from 57,200 tomans to 65,100 tomans. The chart above visually represents this steady upward trend, highlighting a dramatic spike around February 10, 2025, when prices peaked before stabilizing. But what’s behind this surge?
Key Factors Behind the Rising Exchange Rate
1. Political Uncertainty and Economic Anxiety
Geopolitical tensions and local political instability have led to a climate of economic uncertainty, prompting many Iranians to seek financial security in foreign currencies. This demand surge has put additional pressure on the toman.
2. Temporary Interventions, Long-Term Impact?
Government and central bank interventions to stabilize the currency have been short-lived and largely ineffective. While minor corrections have occurred, as seen on the chart, the overall trend remains strongly bullish for CAD.
3. Lack of Positive Economic Developments
Unlike previous fluctuations, the current increase isn’t linked to seasonal market shifts or export-driven demand. Instead, the lack of economic optimism and concerns over inflation have fueled the CAD’s continued rise.
A Closer Look at the Chart
The graph demonstrates a gradual price increase from January 20 to early February, followed by a sharp upward movement between February 7 and February 10, where the buy price and sell price diverge more significantly. This sudden hike suggests either a major market reaction to external news or a rush of speculative buying.
After the peak, prices showed a slight correction but continued climbing, reinforcing the notion that the toma remains under devaluation pressure. This pattern mirrors similar price hikes in the US dollar (USD), euro (EUR), and British pound (GBP)—a global trend affecting Iran’s foreign exchange market.
What’s Next?
Unless major economic reforms or stabilizing policies are introduced, the toman is unlikely to recover in the short term. Investors and businesses closely watching currency trends may increase their reliance on stable foreign assets, further driving demand for the CAD.
