Hasan Rowhani's surprise victory in Friday's elections puts him in charge of an executive branch that traditionally has taken the lead in handling the economy, while nuclear efforts, defence and foreign affairs remain primarily in the hands of the ruling clerics and their powerful protectors, the Revolutionary Guard.
This creates a challenge for Rowhani, as Iran suffers from more than 30 per cent inflation as well as 14 per cent unemployment linked to Western sanctions for Tehran's suspect nuclear program. Rowhani has called for reaching out to the international community but has little authority over the nuclear activities tied to sanctions.
The semi-official ISNA agency said Rowhani discussed inflation and unemployment as well as possible members of his cabinet with Ali Larijani, speaker for Iran's conservative dominated parliament.
"Today, we took the first step for co-operation between two branches of power," Rowhani was quoted as saying. Rowhani will take office in August and needs parliament to approve his proposed nominees for 18 ministries.
Meanwhile, the Revolutionary Guard declared its willingness to co-operate with the president. "We announce our comprehensive readiness for interaction and co-operation with the next administration in the framework of legal duties and assignments," the Guard said on its webpage.
Later in the day state TV said Rowhani met with the country's Supreme Leader Ayatollah Ali Khamenei, who has final say on all state matters, for the first time since the election. The report said Khamenei offered "necessary guidelines" to Rowhani but did not elaborate.
The outward displays of co-operation by Iran's establishment reflect its desire to close the political rift caused by unrest over disputed election results in 2009, and signal to world leaders that the ruling clerics are not publicly standing against Rowhani's call for outreach and dialogue with the international community.
Iran's stock exchange meanwhile climbed for a second continuous day, jumping 1,194 points to close at 47,460 — almost a 2.5 per cent increase, the exchange's website said. The dollar was trading at 34,600 rials in foreign currency shops, compared to 36,300 rials on Thursday, the eve of the election.
The rise came after a night of a celebration in Tehran, as the announcement of Rowhani's victory sent tens of thousands of jubilant supporters into the streets. Cars honked and blared music ranging from patriotic songs to Lambada.
Riot police, who were frequently deployed on Tehran streets in the run-up to Friday's vote, were conspicuous in their absence. State TV showed footage of the celebrations and rebroadcast a speech he made after his victory was announced Saturday, asserting Iran's readiness to improve its ties with the world.
Also on Sunday, two of Iran's close allies, Syria and the Lebanese militant group Hezbollah, congratulated Rowhani on his election victory. Tehran backs President Bashar Assad in his struggle against rebels seeking his overthrow, as well as Hezbollah, which recently entered the Syrian civil war in support of the regime.
Syria's official news agency quoted Assad as saying he plans to increase co-operation between the two countries, especially against "plots of aggression, hegemony, and violation of national sovereignty in our region."
Hezbollah's website said the group's leader, Hassan Nasrallah, cabled Rowhani to congratulate him, saying the election had "revived the big hopes of all your friends and brothers of the Arabs, Muslims, and oppressed peoples."
Elsewhere, German Foreign Minister Guido Westerwelle said his government expects Iran to do its part to help bring about a swift diplomatic solution to its standoff with the West over its disputed nuclear program.
In a statement, he also urged Iran to "meet its obligations to protect human rights and to strive to play a constructive role in the region."