Iran’s currency, the rial, plummeted to an all-time low against the U.S. dollar over the weekend as tensions with Washington continue to escalate. Following a prolonged holiday, the rial was traded at more than 1 million to the dollar, a sharp decline felt since the Persian New Year, Nowruz. The festive period saw most currency shops shut and informal trading pushing rates higher in open markets. On Saturday, as business resumed, the rate dropped further to 1,043,000 rials per dollar, cementing its new weakened status.
In Tehran, especially along Ferdowsi Street—a central hub for money exchanges—some traders have dimmed their rate displays out of concern for the rial’s unpredictable fluctuation. Reza Sharifi, working at one exchange, stated, “We turn it off since we are not sure about the successive changes of the rate.”
The Iranian economy remains battered by international sanctions, primarily since Donald Trump pulled the United States out of the nuclear deal in 2018. During the 2015 agreement, which demanded reduced uranium enrichment in exchange for lifting sanctions, the rial had traded at 32,000 to the dollar. However, Trump’s reinstatement of the “maximum pressure” strategy restored these sanctions, severely affecting those trading in Iranian oil, including transactions in China.
Efforts by Trump to initiate direct talks with Iran’s Supreme Leader Ayatollah Ali Khamenei have made little progress, with communications now leaning on indirect negotiations which under the Biden administration stalled. Furthermore, Trump’s intensified airstrikes against Iranian-backed Houthi rebels in Yemen, as part of his broader campaign, continues to challenge regional stability.
According to market analyst Mehdi Darabi, increased external pressures have led to expectations of reduced oil sales and greater inflation, hence pushing up rates for hard currencies. These challenges have led average Iranians to protect their savings by buying tangible assets like gold and cars or experimenting with cryptocurrencies.
Politically, Iran faces internal strife, fueled by economic duress and ongoing debates about the compulsory hijab and potential hikes in gasoline prices, which have previously triggered national unrest. In response, authorities have eased some restrictions, exemplified by the anticipated release of Mehdi Karroubi from house arrest, marking a potentially symbolic thawing in political openness.
The economic strain also challenges President Masoud Pezeshkian, who faces criticism, such as in March when the rial was at 930,000 per dollar. His finance minister was impeached amid accusations of mishandling the economy. Further controversy arose when vice president Shahram Dabiri was dismissed for indulging in a luxury overseas trip during public financial hardship.
Reflecting on diplomatic tensions with the U.S., Pezeshkian articulated demands for equal negotiation terms with America, rejecting the notion of threats preceding dialogue. He argued, “America today is not only humiliating Iran, but the world, and this behavior contradicts the call for negotiations.”