WASHINGTON (AFP) - The economic benefits of an interim nuclear agreement between Iran and world powers are already being felt in the Islamic republic but the relief is limited, a report said Thursday.

A deal struck in November to suspend international sanctions for six months has seen an improvement in Iran's stock market and a drop in inflation, said the Institute of International Finance, which represents 450 banks and global financial institutions.

In particular, the gap between the black market and official exchange rates for the Iranian rial have narrowed, "falling from an average of IR 35,675 per dollar in June to IR 29,700" as of December 16, the report said.

"Real GDP could stabilize and even rise modestly in the current fiscal year," which ends on March 20, 2014.

But the report said the political situation in the Middle East remains volatile and cautioned that only a comprehensive agreement on Iran's disputed nuclear program would revive the country's economy.

"Failure to agree could bring about new sanctions and do further, possibly irreversible, damage to Iran's economy," the IIF said, warning that deep reforms are needed to spur strong economic growth.

Under the deal reached in Geneva in November, Iran agreed to freeze some of its nuclear activities in return for some sanctions relief. The agreement is aimed at buying time for a comprehensive accord.

"In time, improved economic conditions could strengthen President Hassan Rouhani's position in Iran's politics and provide him with greater room to advance the new policy of accommodation and greater transparency with the international community," the IIF report said.