Iran’s Currency Falls To An All-Time Low With Prospect Of US Action

Monday, 01/29/2024

Iran’s currency, rial, hit an all-time low on Monday amid fears of US retaliation for a drone attack over the weekend that killed three American servicemen in Jordan.

The US dollar rose to more than 584,000 rials, the highest since February 2022, when it briefly traded at that level. The euro topped 630,000 and the British pound reached 740,000 rials.

President Joe Biden announced on Sunday that Iranian-backed militia were responsible for striking a US base near the Jordanian and Syrian border killing 3 and injuring more than 30 service members. Later in the day, he vowed retaliation against those responsible.

This brings the rial’s fall to more than 15 percent since the beginning of January, when tensions began to rise with attacks on international shipping by Iran-backed Houthis and US retaliatory strikes.

The Iranian currency, which has steadily lost value since the 1979 revolution, began depreciating in 2018, when then-president Donald Trump withdrew from the JCPOA nuclear deal and imposed sanctions on Iran. Since then, the dollar rose from 42,000 rials to more than 580,000. Before the establishment of the Islamic Republic in 1979, the dollar traded at 70 rials.

With annual inflation hovering above 40 percent for three years, the Iranian government faces a precarious situation. The fall of the rial is bound to fuel more inflation and the impoverishment of the population, which is already facing rising prices.

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