The Iranian rial plummeted to a record low: on Wednesday, the US dollar on Tehran’s free market exceeded the 2.1 million Iranian rial mark. Since March, the rial has lost about 60% of its value against the dollar, or 63% by another estimate. The euro reached 2.55 million rials, while the Imami gold coin was priced at 2.26 billion rials.
The head of the Central Bank of Iran pledged to inject 2 billion dollars into the foreign exchange market, acknowledging that inflation is exerting «strong pressure on people’s welfare». At the start of the Iranian calendar year in March, the dollar was worth approximately 1.35 million rials.
Accelerating decline and economic pressure
The rial’s fall accelerated after the US reimposed a maritime blockade on Iranian ports in July following the collapse of a short-lived ceasefire. The rial has been in freefall since the US-Israeli strikes on Iran on February 28, which sparked the current war, now in its seventh month. The currency’s decline has accelerated amid Washington’s intensification of its economic pressure campaign.
The US Treasury Department cut off Iran’s access to regional banks, blocking one of the Islamic Republic’s main channels for accessing foreign currency and making import payments. The maritime blockade on Iranian ports further increased pressure by restricting trade routes and reducing Iran’s oil export revenues.
The euro reached an unprecedented 2.55 million rials, while the British pound hit 2,976,000 rials. The UAE dirham, a benchmark for rial pricing in regional markets, reached 600,000 rials for the first time. One gram of 18-karat gold rose to over 225.7 million rials, and the Imami gold coin—a standard unit of value in Iran—was priced at 2.26 billion rials.
Abdolnaser Hemmati, governor of the Central Bank of Iran, stated that the bank is ready to inject 2 billion dollars into the foreign exchange market to stabilize the rial. He attributed the recent decline primarily to psychological rather than fundamental economic factors. «Tensions in the foreign exchange market will subside, and the recent rise in exchange rates is driven more by psychological than real economic factors,» he said.
Hemmati acknowledged that inflation is putting severe pressure on households. «While inflation and rising prices are heavily weighing on people’s welfare and daily lives, and these hardships are tangible, the Central Bank has managed to curb the acceleration of inflation using monetary, supervisory, and prudential tools,» he stated.
He dismissed US claims that Tehran lacks access to financial reserves. «These claims are completely baseless. The reserves have not been frozen, and the Central Bank has access to stable resources, as well as numerous oil and non-oil revenues,» he said. According to Hemmati, since March, over 18 billion dollars in foreign currency has been allocated for the import of essential goods, medicine, animal feed, and raw materials. He did not provide additional details to verify this figure.
Dual exchange rate and impact on consumers
Iran operates a dual exchange rate system. The official rate, set by the Central Bank and used for government operations and subsidized imports of essential goods, is significantly stronger than the free market rate, which is accessible to ordinary Iranians and businesses. The gap between the two rates has widened sharply since the start of the war: the free market rate is now more than double the official rate.
The rial’s collapse directly affects consumer prices. Iran was already facing high inflation before the war, and the further devaluation of the currency has increased the cost of all imported goods, raw materials, and energy carriers. Iranians who keep their savings in rials have seen their purchasing power roughly halve in less than six months. Gold and foreign currency have become the primary means of preserving value for those with access to them.
Iran’s official currency is the rial, though most Iranians conduct daily transactions in tomans—a colloquial unit equal to 10 rials. The toman is so deeply ingrained in everyday use that shops, restaurants, and real estate listings almost exclusively quote prices in tomans.
At Wednesday’s free market rate, the US dollar traded at approximately 220,000 tomans. In 2020, the government announced plans to officially replace the rial with the toman and remove four zeros from the currency. This denomination plan has not yet been fully implemented.
According to: Euronews
