TEHRAN, Iran — On Wednesday, the Iranian rial reached an unprecedented low, marking a decline of over 10% since Donald Trump was elected President of the United States back in November. This significant drop signals further economic difficulties for Tehran as it continues to navigate the ongoing conflicts in the Middle East.
According to traders in Tehran, the rial traded at a staggering 777,000 rials for one U.S. dollar, in stark contrast to 703,000 rials at the time of Trump’s victory.
In response, Iran’s Central Bank has previously intensified its efforts to stabilize the currency by injecting hard currencies into the market. In a recent state television interview, Central Bank Governor Mohammad Reza Farzin announced plans to boost the foreign currency supply to stabilize exchange rates, revealing that $220 million had recently been channeled into currency markets.
The dramatic currency decline coincided with Iran’s decision to shut down schools, universities, and government offices due to an escalating energy crisis, worsened by severe winter conditions. What began as summer blackouts has now escalated into a situation exacerbated by extreme cold, heavy snowfall, and air pollution challenges.
Although Iran is rich in natural gas and oil, the sector has suffered from years of underinvestment and sanctions, leaving it ill-equipped to handle seasonal demand spikes. As a result, the country has experienced rolling blackouts and gas shortages.
In 2015, during the nuclear deal negotiations with global powers, the rial was valued at 32,000 to the dollar. This value had climbed to 584,000 by July 30, the day when President Masoud Pezeshkian assumed office after a tragic helicopter crash claimed the life of hardliner President Ebrahim Raisi in May.
Trump’s withdrawal from the nuclear agreement in 2018 initiated a prolonged period of strained relations between the two nations, tensions that continue to exist today. Iran’s economy has been grappling with significant international sanctions relating to its rapidly advancing nuclear program, which now allows uranium enrichment at levels close to weapons-grade.
Pezeshkian came to office with a commitment to negotiating an agreement aimed at alleviating some of these Western sanctions. However, the atmosphere remains tense, especially considering the historical backdrop of animosity following the 1979 U.S. Embassy takeover and the subsequent hostage crisis, which lasted 444 days. Prior to the revolution, the rial was valued at a mere 70 rials per dollar.
Additionally, Iran is deeply engaged in various conflicts across the Middle East, supporting allies and militant groups such as Palestinian Hamas, Lebanon’s Hezbollah, and Yemen’s Houthi rebels, all of whom have faced significant challenges in their respective battles.