As Iran’s Currency Sinks, Markets Brace For Higher Inflation

Friday, 03/08/2024

Real Estate and gold prices in Iran try to catch up with the rising value of foreign currencies as the rial sank to its lowest point in history this week, heralding higher inflation.

Since early January, the US dollar has risen from 500,000 rials to more than 600,000, a 20-percent rise against the Iranian currency.

Since early 2018, the rial has fallen 15-fold as the United States imposed economic sanctions when it withdrew from the JCPOA nuclear deal.

Media in Tehran reported on Friday that real estate prices are rising to be on par with the dollar. Real estate is treated as capital investment by Iranians, who are not willing to sell cheaper when the rial falls against major currencies.

The same also applies to gold, cars and imported merchandise. The US dollar was trading at 600,800 rials on Friday as the euro rose to 666,000 and the British pound to 780,000 rials. Friday is a weekend day in Iran and most markets are closed.

Media reports say that as the new week begins on Saturday, the rial can take another hit. One news website reported that the government is auctioning gold at much higher prices, signaling that the rial can sharply fall in the coming days.

Official annual inflation hovers near 50 percent, but the rial’s fall can directly impact prices and push the inflation rate to near hyper-inflation levels in the coming months.

More News