Iran’s rial sinks to historic low as UN sanctions to return

“We’re not afraid of war. We do not seek war,” he told NBC’s Tom Llamas. “President Trump has said that his administration has come to create peace, but the path that they have embarked upon will set fire to the entire region.”

Iran would never initiate a conflict but would give “the strongest answer” to any attack, Pezeshkian said.

Tehran continues to build its defense capabilities to deter adversaries, he added.

On nuclear issues, he rejected suggestions that Iran is developing weapons, pointing to the Supreme Leader’s fatwa against weapons of mass destruction.

He said inspectors from the International Atomic Energy Agency were welcome to visit sites in Iran, dismissing reliance on satellite images as insufficient.

Iran has resumed construction at an underground mountain site following US and Israeli strikes on its nuclear facilities, with satellite imagery and analysts indicating the work may reflect efforts to rebuild its damaged nuclear program.

The president also commented on domestic unrest, saying Iranians “have a right to choose” in response to questions about the enforcement of hijab laws. He acknowledged mishandling of Mahsa Amini’s case but accused outside observers of exaggerating Iran’s record while ignoring civilian deaths in Lebanon, Gaza, Yemen, and Syria.

Supreme Leader Ali Khamenei has ruled out direct talks with the US on missiles and uranium enrichment.

The president also referred to an injury he sustained during Israeli strikes in June’s 12-day war, saying doctors drained fluid from his knee and that the wound was minor.

Heshmatollah Falahatpisheh, a former member of parliament’s national security and foreign policy committee, criticized those welcoming the reimposition of UN sanctions.

“The extremists’ celebration of the return of sanctions is unbelievable,” he wrote on X.

“For years the people have paid the price for the words and deeds of those who are not truly Iranian. Their mindset is detached from the hardships of the people, and their lavish tables are built on the suffering of children who go to bed hungry.”

Several Iranian economists say the downturn is already entrenched and that officials are underestimating the severity of the crisis.

Tehran University professor Albert Boghozian argued last week that Iran now shows the classic symptoms of stagflation—negative growth, high inflation, and rising unemployment.

“Officials must not ignore the danger of deepening stagflation, which is likely to intensify if the snapback proposed by the UK, France, and Germany is implemented,” he cautioned.

The Statistical Center of Iran reported that GDP shrank by 0.1% in the spring.

Excluding the petroleum sector, the contraction deepened to -0.4%. Agriculture was the hardest hit, with output falling 2.7%. This downturn marks the first time since 2021 that Iran’s economy has posted negative quarterly growth.

'Worse to come’

The reversal is striking given the 3.0% expansion recorded in the last full calendar year ending March 2025. That period, supported by high oil revenues and relative stability, allowed for modest but steady growth.

Ali Ghanbari, a macroeconomist and former deputy agriculture minister, predicted conditions will deteriorate further in the coming months.

“Iran is heading toward a more difficult economic period in the second half of the Iranian year (September 2025 to March 2026),” he told reporters in Tehran.

He forecast a contraction of 1–2% by March 2026 and inflation climbing above 54%.

“The downturn had been anticipated due to sanctions and political tensions,” he added, “but the scale of inflation will place even greater strain on household budgets.”

Such levels of inflation would erode real incomes and fuel social discontent — a sensitive issue for the government as it braces for renewed sanctions.

‘Sanctions hinder development’

The Majles Research Center has argued that renewed UN sanctions would be less damaging than existing US restrictions, which already limit Iran’s access to global markets and financial channels.

But economists such as Boghozian believe Tehran has few tools left to cushion the blow.

“The Iranian government cannot do much about the UN sanctions,”he warned. “Continued stubbornness will only deepen the suffering.”

Sweeping UN sanctions are set to be reimposed on September 27 following the end of the 30-day snapback period.

Boghozian warned that their return could have consequences far beyond economic hardship, setting the scene for more confrontation with Iran’s foes.

“With the threat of war, Iran cannot realistically pursue development,” he said. “War and sanctions will rob the country of opportunities. If we fail to take initiative, the other side will dictate the terms.”

Iranian foreign minister Abbas Araghchi told Iran International that the 2015 nuclear agreement, once hailed as a diplomatic achievement, collapsed after the United States reimposed sanctions.

He said the 2025 negotiations followed a similar pattern, beginning with Washington’s acceptance of talks but breaking down when the US joined Israeli military strikes. Araghchi endorsed Ali Khamenei’s recent remarks, describing negotiations with the United States as an impasse.

The Islamic Republic recalled its ambassadors from Germany, France and the United Kingdom for consultations, Iranian state media reported Saturday.

The move followed the decision by the three European governments to invoke the Joint Comprehensive Plan of Action snapback mechanism in order to reinstate previously lifted UN Security Council resolutions.