The benchmark Tehran Stock Exchange index managed to break above its all-time highs just before the Iranian fiscal year ended March 19. The annual total return reached a whopping 187%, registering the highest annual growth in the exchange's existence. Interestingly, the equal-weighted index, the barometer applied to measure the performance of micro-size listed companies, rocketed up during the same period by 437%. This all occurred at the same time that the activity of firms faced macroeconomic risks due to major setbacks facing the overall Iranian economy.

The TSE's trend is set to continue in the current fiscal year despite the downward effects of the coronavirus outbreak. However, the stock market may not enjoy the luxury of climbing as much.

While this record performance may seem at odds with the country’s dire economic situation — they are in fact somewhat related, as a budget deficit pushes the government to print money and this causes the liquidity to grow more rapidly. 

A key factor behind a prediction that the benchmark is poised to increase again this year is the government's staggering budget deficit in the current financial year. Although the budget has not been approved yet, it is expected to experience a deficit of at least 1.31 trillion rials, or $9.5 billion at the NIMA rate, an online exchange rate platform run by the Central Bank of Iran. What is obvious is that the government won't be able to collect much of its budgeted income, including tax revenues, under the current circumstances of the Iranian economy.