The Iranian currency hit an all-time low of 719,500 rials to the US dollar on Wednesday, marking the fourth record drop since September, when Tehran began losing influence in the region to Israel and other players.
Compared to the same date last year, when the dollar was valued at 504,000 rials, the current rate represents a staggering 43% rise.
The rial began trading at 716,000 to the dollar on Wednesday morning but surged to nearly 720,000 rials by noon. Tether, which is an equivalent of US dollar in crypto markets, was being traded at 726,000 rials on the same day.
One notable shock to the currency market came on November 6, when the dollar initially jumped past 700,000 rials following the news of Donald Trump’s victory in the US presidential elections. But the currency began it decline in September after serious blows by Israel against Iran's main regional proxy, Hezbollah and an Israeli air strike that destroyed most of Iran's air defenses.
However, authorities temporarily stabilized the rate below that threshold, most likely by selling foreign currencies to support the rial. The downward trend resumed later that month after the International Atomic Energy Agency’s (IAEA) Board of Governors issued a resolution critical of Tehran for its nuclear program which has breached international regulations, producing 60% enriched uranium as Iran edges ever closer to nuclear weapons capability.
The rial has faced significant volatility throughout the year, influenced by volatility in the region and direct conflict between Iran and Israel.
Iran’s reliance on oil and gas exports for foreign currency earnings has made the country particularly vulnerable to international sanctions. Under Joe Biden’s presidency, sanctions enforcement eased somewhat, offering Tehran a lifeline. But the return of Donald Trump to the White House, combined with Europe’s increasingly tough stance to crack down on Iran's nuclear program, foreshadows greater economic strain for the Islamic Republic.
Inflation in Iran already exceeds 40%, and the rial’s devaluation will exacerbate price hikes, further eroding the purchasing power of ordinary Iranians.
Tens of millions have faced declining living standards over the past five years, with wages lagging behind inflation and around one third of the population now living below the poverty line.
The average worker now earns the equivalent of less than $200 per month, while official data suggests that $500 is the bare minimum required to meet basic needs.
As the dollar’s rise continues, the impact on daily life for Iranians grows more severe. Essential goods and services, already out of reach for many, are likely to see further price increases, deepening economic hardship and fueling public discontent.
