Iran's Rial Hits Historic Low Following Consulate Attack

Thursday, 04/04/2024

On Thursday, Iran's national currency experienced another plunge to an unprecedented low with the US dollar trading at 646,000 rials following this week's Israeli airstrike on Iran's consulate in Damascus.

It marks the highest recorded exchange rate for the American currency in Iran and represents an over 25 percent drop since early January. The Euro was also traded at 701,500 rials, while the British pound hovered near 818,000 rials, reflecting the economic turmoil within the country.

The airstrike this week resulted in the deaths of two high-ranking IRGC commanders and five officers, sparking vows of retaliation from the Iranian regime.

Abdolnasser Hemmati, the ex-chief of the Central Bank, voiced criticism against President Ebrahim Raisi's economic policy amid the crisis, stating, "Despite numerous assurances, the pricing trends of essential items and assets are taking an intolerable course. The public's perception of unfolding events... validates the economic neglect. Even among its proponents, doubts are arising regarding the government's effectiveness and management!"

The decline of the rial has been a long-standing trend since the 1979 revolution, but it notably accelerated in 2018 following the US withdrawal from the JCPOA nuclear deal and the subsequent imposition of sanctions on Iran's oil exports and banking sector. Remarkably, the currency was valued at 70 rials per dollar in 1978.

The sharp devaluation of the rial has exacerbated inflationary pressures over the past five years, pushing millions of Iranians below the poverty line. Official government statistics indicate an annual inflation rate of over 40 percent, though many experts believe the actual figure to be higher.

Iranian authorities have consistently displayed ambivalence towards the impact of international measures on the nation's economy. While attributing any shortcomings to the actions of the US and its allies, they simultaneously assert that these punitive measures lack substantial efficacy, further complicating the economic landscape within Iran.

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