The Iranian rial slid further on Thursday, with the US dollar trading around 957,000 rials in Tehran’s free market, as markets braced for the possible reinstatement of UN sanctions through the so-called "snapback" mechanism.
Sterling reached 1,289,000 rials while the gold coin climbed to 860 million rials, reflecting safe-haven demand amid currency weakness.
The losses come ten days before the European powers' deadline to decide on triggering the mechanism that could reimpose UN sanctions on Iran. Washington has also vowed to halt Tehran’s oil exports to China as part of its maximum pressure campaign.
The snapback mechanism, part of UN Security Council Resolution 2231 that endorsed the 2015 nuclear deal between Tehran and world powers, allows any party to restore UN sanctions if Iran is accused of non-compliance.
France, the UK and Germany have warned Iran they will restore UN measures unless talks resume and produce results by the end of August.
Experts say the looming deadline is driving the rial's downfall. Iranian officials, however, have sought to play down the potential economic fallout of renewed sanctions.
Earlier this month, Foreign Minister Abbas Araghchi said that the consequences of the snapback mechanism had been “exaggerated” and made to appear more serious than they are.
Last week, Iran International reported that Iran’s Ministry of Intelligence has issued confidential guidance to ministries and major companies to prepare for the possible return of punitive UN measures.
The ministry warned of “severe currency fluctuations, reduced purchasing power, increased unemployment, layoffs and heightened social discontent” if sanctions return, and urged companies to seek alternative suppliers in countries including China, Russia and Iraq.
