Key facts
- The US dollar surpassed 2.1 million Iranian rials on Wednesday, a new record.
- The rial has depreciated by 63% against the dollar since March.
- The euro reached 2.55 million rials, and the pound hit 2,976,000 rials.
- The Central Bank of Iran plans to inject $2 billion to stabilize the currency.
- Inflation is placing significant pressure on Iranian households.
The Iranian rial is experiencing a severe devaluation, with the US dollar breaking above 2.1 million rials on Wednesday, marking a new record. Since March, the rial has lost approximately 63% of its value against the dollar. The euro and UK pound have also reached unprecedented levels against the rial, trading at 2.55 million and 2,976,000 rials, respectively. The UAE dirham also hit a record high of 600,000 rials.
This sharp decline has been exacerbated by the US reimposing a naval blockade on Iranian ports in July and tightening economic pressure, including cutting off Iran's access to regional banks. These measures have restricted trade routes and reduced Iran's oil export revenues.
In response, Abdolnaser Hemmati, governor of Iran's Central Bank, pledged to inject $2 billion into the foreign exchange market to stabilize the rial. He attributed the recent currency slide primarily to psychological factors rather than fundamental economic issues, while acknowledging the significant pressure inflation has placed on citizens' livelihoods. Hemmati also refuted claims that Iran's financial reserves are frozen, stating the central bank has access to resources and has provided over $18 billion for essential imports since March.
The rial's collapse directly fuels consumer price increases, as the cost of imported goods, raw materials, and energy inputs rises. Iranians holding savings in rials have seen their purchasing power significantly diminish, leading many to seek value in gold and hard currency.