The value of Iran’s currency, the rial, reached a historic low on Monday as the anticipation of new U.S. sanctions loomed. The currency fell to 2.02 million to the U.S. dollar as trading commenced in currency markets. While the Central Bank’s official rate remains approximately 1.5 million rial to the dollar, most Iranians pay the market rate.
Already faltering under previous sanctions and inflation, the rial’s value further plummeted due to continuous conflict since February 28. Everyday goods in Iran have become prohibitively expensive, with rice prices surging by about 60% and beef costs skyrocketing by over 150%. The International Monetary Fund projects that Iran’s GDP will shrink by over 5%.
Despite severe economic conditions, political discontent has not escalated. Iran maintains strategic influence by using its position to disrupt shipping in the Strait of Hormuz. This critical waterway previously facilitated one-fifth of global oil trade but now experiences stalled traffic, critically affecting the global economy and increasing pressure on U.S. President Donald Trump before congressional elections.
The ongoing conflict centers on control of the Strait, with Iran demanding a fee for reopening it to ship traffic. Negotiations between Iran and Oman are in progress to discuss joint management of the strait. Oman’s foreign minister is scheduled to meet with Iranian officials to finalize the arrangement.
The U.S. administration, under President Trump, plans to intensify sanctions, targeting countries still engaging in trade with Iran. In response, the United Arab Emirates, one of Iran’s top trading partners, has already halted all trade with Iran.
U.S. Treasury Secretary Scott Bessent, in an opinion piece for the Financial Times, argued that President Trump’s policies have crippled Iran’s economy. Bessent warned of the consequences of accommodating aggression, suggesting that it would not lead to lasting peace.
Meanwhile, the Iranian Foreign Ministry, represented by Esmail Baghaei, cautioned that further escalations could have serious repercussions, emphasizing Iran’s capability to respond.
As diplomatic efforts continue, Pakistan’s delegation, a key player in securing a 60-day ceasefire in June, arrived in Iran to promote discussions aimed at ending the conflict.
In Tehran, many citizens are losing faith in peaceful resolution. Among them is 73-year-old Sadegh Mahmoudi, who stood with others to buy U.S. dollars, hoping to protect his savings against further currency devaluation. Mahmoudi expressed his skepticism about achieving a peaceful settlement to the crisis.
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