Iran’s currency weakened sharply on Thursday as European nations prepared to trigger the return of United Nations sanctions under the snapback mechanism, deepening economic pressure on the Islamic Republic and adding to uncertainty around its nuclear program.
The sharp drop extends a steady decline in the rial over recent weeks. Currency dealers quoted the dollar at around 1,030,000 rials on the open market, according to local reports, compared to 957,000 rials last week.
Reuters has reported that Britain, France and Germany could begin the snapback process as early as Thursday after Iran failed to resume talks or restore cooperation with the International Atomic Energy Agency. The three countries set a late August deadline earlier this month.
Markets react to snapback risk
The currency’s continued slide has heightened concerns among traders and the public, as sanctions could further restrict Iran’s access to global markets and increase pressure on imports, inflation, and employment.
Once triggered, the snapback process leads to the automatic reimposition of UN sanctions after 30 days unless the Security Council adopts a resolution to continue lifting them — a step that any permanent member can veto.
The measures would freeze Iranian overseas assets, ban arms deals with Tehran, and penalize missile development activities. They could also affect oil sales to China, one of Iran’s top customers.
Earlier this month, Iran International reported that Iran’s Intelligence Ministry has warned senior officials and companies to prepare for renewed economic disruptions. Confidential guidance cited risks of "severe currency fluctuations, reduced purchasing power, increased unemployment, layoffs, and heightened social discontent."
Business group warns of worst-case currency spike
Iran’s Chamber of Commerce this week published a report forecasting three scenarios for the economy in the event of snapback sanctions. In its most pessimistic case, the rial could fall to 1.65 million per dollar, with annual inflation reaching 90 percent by the end of the year. Economic growth was projected to remain negative under all scenarios.
Time running out
The current UN resolution allowing use of the snapback mechanism is set to expire on October 18. Russia, which will assume the rotating presidency of the UN Security Council that month, has floated proposals to extend the measure. After the resolution expires, any future effort to restore UN sanctions would likely face a veto from China or Russia.
Under the existing mechanism, any party to the 2015 nuclear deal can initiate snapback by notifying the Security Council of Iranian non-compliance. Sanctions would then be automatically reinstated after 30 days unless the Council votes to continue lifting them — a step that can be blocked by any permanent member.
In recent weeks, Iran has made only limited diplomatic efforts to prevent that outcome. Foreign Minister Abbas Araghchi said last week that talks alone were unlikely to avert further escalation, noting that negotiations had been ongoing when the June conflict with Israel erupted. “Sometimes war is inevitable,” he said in an interview with state media.
The IAEA, meanwhile, has called for inspections to resume “as soon as possible.” Inspectors were recently present to observe fuel replacement at the Bushehr nuclear reactor, operated with Russian support, but broader access to key enrichment and research sites remains suspended.
