Due to currency shops closing and only informal street trade occurring during the Persian New Year, Nowruz, the exchange rate fell to more than 1 million rials, further straining the market.
As the nation resumed work after a lengthy holiday, Iran’s rial currency fell to a historic low against the US dollar on Saturday. It costs more than 1 million rials for one US dollar, and tensions between Tehran and Washington are expected to drive it considerably lower.
Due to currency shops closing and only informal street trade occurring during the Persian New Year, Nowruz, the exchange rate fell to more than 1 million rials, further straining the market. However, the rate dropped even more to 1,043,000 to the dollar as traders returned to work on Saturday, indicating that the new low was here to stay.
As doubt loomed about how much lower the rial could sink, some merchants even turned off their electronic signs displaying the going rate on Ferdowsi Street in Tehran, the capital and the center of Iran’s money exchanges.
Reza Sharifi, who works at one exchange, stated, “We turn it off since we are not sure about the successive changes of the rate.”
International sanctions have had a serious negative impact on Iran’s economy, especially since U.S. President Donald Trump unilaterally pulled out of Tehran’s nuclear agreement with other nations in 2018. The rial was trading at 32,000 to the dollar at the time of the 2015 agreement, which saw Iran significantly reduce its uranium enrichment and stockpiling in exchange for the removal of international sanctions.
Trump resumed his so-called “maximum pressure” campaign against Tehran with sanctions in January, following his return to the White House for a second term. He targeted companies that dealt in Iranian crude oil once more, especially those that sold it cheaply in China.
In the meantime, Trump has written to Ayatollah Ali Khamenei, the supreme leader of Iran, in an attempt to initiate direct negotiations between Washington and Tehran. Iran has so far insisted that it is open to indirect negotiations, but during the Biden administration, these talks have not advanced.
After Israel destroyed other militant groups during its war on Hamas in the Gaza Strip, Trump is now launching a fierce bombardment campaign against the Iranian-backed Houthi rebels in Yemen, who are the final group in Tehran’s self-described “Axis of Resistance” capable of attacking Israel.
Market analyst Mehdi Darabi told Tehran’s Donay-e-Eqtesad economic journal that he thought foreign pressures in recent months led to “expectations for the possibility of a decrease in oil sales and more inflation, and it caused a higher rate for hard currencies.”
The public’s savings have been wiped out by economic upheavals, forcing the average Iranian to hoard hard currency, gold, automobiles, and other material possessions. Others invest in cryptocurrency or fall for schemes that promise quick riches.
While women continue to disobey the law on Tehran’s streets, internal political pressure over the mandated hijab, or headscarf, is still raging. Additionally, there are still rumors that the government may raise the price of the nation’s subsidized petrol, which has previously led to riots across the nation.
Masoud Pezeshkian, the reformist president of Iran, has also been under increased pressure as a result of the declining rial. Abdolnasser Hemmati, Iran’s finance minister, was impeached by the Iranian parliament in March, when the currency was at 930,000 rials to the US dollar, due to the crash and allegations of poor management.
According to state media, Pezeshkian also fired Shahram Dabiri, his vice president in charge of legislative relations, for taking an opulent Antarctic cruise out of anger about government expenditures. Even though Dabiri and his wife reportedly paid for their trip with their own money, the Instagram pictures of their trip infuriated the Iranian public, who are already struggling to make ends meet.
In dismissing Dabiri, who has yet to provide a public explanation for his trip, Pezeshkian stated, “In a situation where the economic pressures on people are huge and the number of deprived people is massive, expensive recreational trips by officials, even with their own personal funds, are not defensible or reasonable.”
