Iran’s currency falls to a record low of 1.043M rials amid Tehran and Washington tensions
Iran’s rial currency hit a record low against the US dollar on Saturday as people returned to work from the holiday. Now, it costs over 1 million rials for a single dollar. This is only the start because tensions between Tehran and Washington are likely to escalate even further.
During the Persian New Year, Nowruz, when currency shops were closed, the exchange rate dropped to over 1 million rials. At this time, only people trading informally were on the streets. The fact that people were not working put even more pressure on the market.
However, instead of the rate rebounding, it dropped even more, to 1,043,000 to the dollar. This means that the new low is likely to stay.
As a result, some traders turned off their electronic signs showing the going rate on Ferdowsi Street in Tehran, Iran’s capital, where most of the country’s money markets are located. They did this because they didn’t know how much further the rial could fall.
Reza Sharifi, who works at one exchange said, “We turn it off since we are not sure about the successive changes of the rate.”
The US and Iran tension has led to rial’s downturn
International sanctions have had a big impact on Iran’s economy, especially since US President Donald Trump independently pulled the US out of Tehran’s nuclear deal with other world powers in 2018. In return for lifting international sanctions, Iran agreed to reduce the amount of uranium it enriched and stored greatly.
When Trump came back to the White House in January for his second term, he started his so-called “maximum pressure” campaign against Iran with new sanctions. He again went after companies that traded its crude oil, even those selling at a discount in China.
Trump has written to Ayatollah Ali Khamenei, Iran’s Supreme Leader, to try to start direct talks between Washington and Tehran. Iran has said so far that it is open to indirect talks, but talks like these didn’t go anywhere during the Biden era.
At the same time, Trump is continuing his heavy airstrikes against the Houthi rebels in Yemen, who Iran backs. They are the last group in Tehran’s self-described “Axis of Resistance” that can attack Israel because Israel destroyed other terrorist groups during its war against Hamas in the Gaza Strip.
A market analyst, Mehdi Darabi, said that he thinks foreign pressures in the past few months have led to expectations for the possibility of a decrease in oil sales and more inflation. As a result, it caused a higher rate for hard currencies.”
However, the US is not fully responsible for the collapse of its currency. The hijab, or headscarf, rule is still causing a lot of political tension within Iran. In addition, there are also rumors that the government might raise the price of discounted gasoline in the country.
Iran has tried solving its mess. For example, when the exchange rate was 930,000 rials to the dollar in March, Abdolnasser Hemmati was removed as finance minister. This was because the rial was falling too fast, and he was accused of poor management.
Iran’s economy is holding on to crypto and other hard assets
People in Iran have lost all of their savings in the recent economic turmoil, so they are hanging on to hard currencies, gold, cars, and other tangible assets. Others are interested in cryptocurrencies or schemes to get rich quickly.
However, it has not been easy, especially with those in crypto. As the value of the country’s currency falls in an unstable economy, the government of Iran has been cracking down on cryptocurrencies and online trades.
The Central Bank of Iran (CBI) suddenly stopped all rial payments in all crypto platforms as the year began. This meant that more than 10 million crypto users could not use their rials to buy Bitcoin or other global online currencies.
One of the major goals was to stop the struggling national currency from losing more value by not letting it be exchanged for other currencies. Clearly, it didn’t work.
The crypto market grew a lot last year, and it looks like it will continue to grow through 2025. This is because many young Iranians are turning to the growing global market to make money in an economy that is mostly cut off from the rest of the world because of tough Western sanctions.
In fact, power outages have become more regular in the country’s capital and outlying areas. Some people think that crypto mining has something to do with the downtime.
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Iran’s currency falls to a record low of 1.043M rials amid Tehran and Washington tensions
Iran’s rial currency hit a record low against the US dollar on Saturday as people returned to work from the holiday. Now, it costs over 1 million rials for a single dollar. This is only the start because tensions between Tehran and Washington are likely to escalate even further.
During the Persian New Year, Nowruz, when currency shops were closed, the exchange rate dropped to over 1 million rials. At this time, only people trading informally were on the streets. The fact that people were not working put even more pressure on the market.
However, instead of the rate rebounding, it dropped even more, to 1,043,000 to the dollar. This means that the new low is likely to stay.
As a result, some traders turned off their electronic signs showing the going rate on Ferdowsi Street in Tehran, Iran’s capital, where most of the country’s money markets are located. They did this because they didn’t know how much further the rial could fall.
Reza Sharifi, who works at one exchange said, “We turn it off since we are not sure about the successive changes of the rate.”
The US and Iran tension has led to rial’s downturn
International sanctions have had a big impact on Iran’s economy, especially since US President Donald Trump independently pulled the US out of Tehran’s nuclear deal with other world powers in 2018. In return for lifting international sanctions, Iran agreed to reduce the amount of uranium it enriched and stored greatly.
When Trump came back to the White House in January for his second term, he started his so-called “maximum pressure” campaign against Iran with new sanctions. He again went after companies that traded its crude oil, even those selling at a discount in China.
Trump has written to Ayatollah Ali Khamenei, Iran’s Supreme Leader, to try to start direct talks between Washington and Tehran. Iran has said so far that it is open to indirect talks, but talks like these didn’t go anywhere during the Biden era.
At the same time, Trump is continuing his heavy airstrikes against the Houthi rebels in Yemen, who Iran backs. They are the last group in Tehran’s self-described “Axis of Resistance” that can attack Israel because Israel destroyed other terrorist groups during its war against Hamas in the Gaza Strip.
A market analyst, Mehdi Darabi, said that he thinks foreign pressures in the past few months have led to expectations for the possibility of a decrease in oil sales and more inflation. As a result, it caused a higher rate for hard currencies.”
However, the US is not fully responsible for the collapse of its currency. The hijab, or headscarf, rule is still causing a lot of political tension within Iran. In addition, there are also rumors that the government might raise the price of discounted gasoline in the country.
Iran has tried solving its mess. For example, when the exchange rate was 930,000 rials to the dollar in March, Abdolnasser Hemmati was removed as finance minister. This was because the rial was falling too fast, and he was accused of poor management.
Iran’s economy is holding on to crypto and other hard assets
People in Iran have lost all of their savings in the recent economic turmoil, so they are hanging on to hard currencies, gold, cars, and other tangible assets. Others are interested in cryptocurrencies or schemes to get rich quickly.
However, it has not been easy, especially with those in crypto. As the value of the country’s currency falls in an unstable economy, the government of Iran has been cracking down on cryptocurrencies and online trades.
The Central Bank of Iran (CBI) suddenly stopped all rial payments in all crypto platforms as the year began. This meant that more than 10 million crypto users could not use their rials to buy Bitcoin or other global online currencies.
One of the major goals was to stop the struggling national currency from losing more value by not letting it be exchanged for other currencies. Clearly, it didn’t work.
The crypto market grew a lot last year, and it looks like it will continue to grow through 2025. This is because many young Iranians are turning to the growing global market to make money in an economy that is mostly cut off from the rest of the world because of tough Western sanctions.
In fact, power outages have become more regular in the country’s capital and outlying areas. Some people think that crypto mining has something to do with the downtime.
Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
Read More