Iran currency slide sets fresh records as dollar passes 1.28m rials
Foreign exchange prices in Iran surged to new records, sending the rial to fresh lows and pushing gold higher as demand for hard assets intensified on Saturday.
Foreign exchange prices in Iran surged to new records, sending the rial to fresh lows and pushing gold higher as demand for hard assets intensified on Saturday.
The US dollar traded above 1,280,000 rials, the euro crossed 1,500,000 rials and the British pound climbed past 1,700,000 rials in Iran’s open market, extending a sustained upward trend.
Gold prices followed the currency rally, with the new-design coin rising beyond 1,380,000,000 rials, reflecting the weaker rial and continued investor demand for inflation hedges.
Inflation and foreign-exchange volatility have intensified since the return of UN sanctions in September and Tehran’s insistence on maintaining its nuclear enrichment program in defiance of the international community's demands.
Britain, France and Germany triggered the so-called snapback mechanism to restore UN sanction under Security Council Resolution 2231, citing Iran's failure to comply with its nuclear obligations.
The move restored UN penalties previously suspended under the resolution, tightening external constraints on Iran’s economy. Tehran denies seeking a nuclear weapon and accuses the United States and European countries of economic warfare.
Over the past year, food prices have risen more than 66 percent on average, squeezing households and straining purchasing power.
Market participants linked the renewed spike to persistent uncertainty over economic management, limited foreign currency supply and expectations of further depreciation.
The repeated record-setting levels have sharpened concerns over purchasing power, as higher exchange rates feed directly into import costs and domestic prices across the economy.
The detentions took place during a seventh-day memorial ceremony that drew activists and supporters, some of whom later gathered outside the venue and chanted slogans including “Death to the Dictator” and phrases backing Iran’s pre-1979 monarchy, according to videos posted online.
The memorial was held for Khosrow Alikordi, a prominent rights lawyer and former political prisoner who represented detained protesters. He was found dead in his office in Mashhad last week. Supporters and fellow lawyers have questioned the official account of his death, while Iranian authorities say forensic examinations show he died of a heart attack.
“The seventh-day memorial was held with full cooperation of the responsible bodies,” Mashhad public prosecutor Hassan Hemmati-Far said, adding that authorities allowed funeral and memorial ceremonies to go ahead in Mashhad and the nearby city of Sabzevar.
He said the situation changed after the ceremony ended, when a gathering formed outside the mosque. Hemmati-Far said Javad Alikordi, the lawyer’s brother, along with Nobel Peace Prize laureate Narges Mohammadi and activist Sepideh Gholian, addressed the crowd from atop a vehicle.
“By making provocative remarks, they encouraged those present to chant norm-breaking slogans and disrupt public order,” Hemmati-Far said.
Authorities said police later intervened to manage the scene and that two officers were injured. Hemmati-Far said the incident led to the detention of 39 people.
Authorities also said Javad Alikordi later left the scene but was arrested hours afterward after posting videos online that officials described as containing false statements.
Hemmati-Far said all detainees were being held in a legal detention facility and that investigations were continuing.
“Right now, the crisis is not fully felt by society because the Food and Drug Administration is managing empty warehouses,” said Alireza Chizari, head of Tehran province’s association of medical and pharmaceutical equipment producers. “But if this situation continues, the drug supply will become disastrous within one or two months.”
Iran is currently short of around 20 highly critical hospital medicines, while in recent years the country has consistently faced shortages of 40 to 50 drugs, he said.
Chizari said the widening gap between household incomes and rising medicine prices would directly hurt consumption. “The damage caused by the difference between people’s income and the cost of medicines will certainly hit the drug market,” he said.
Iran’s pharmaceutical sector has come under strain from foreign exchange shortages, sanctions-related hurdles and rising costs. In recent weeks, Iranian media have reported shortages of some imported medicines, including brand-name anti-rejection drugs used by kidney transplant patients, with pharmacies in several cities halting distribution.
Medical specialists have warned that sudden switches from imported medicines to domestic alternatives can pose risks for a minority of high-risk patients, even though locally produced drugs work for most cases.
Drug prices, medical equipment and healthcare costs have surged by about 70% since the government removed a subsidized exchange rate for medicine imports earlier this year, according to domestic media. Insurance coverage has not kept pace with price rises, leaving patients to shoulder more of the cost.
Industry figures and lawmakers have warned that continued delays in foreign currency allocation, rising import and shipping costs and budget strains in insurance funds could deepen shortages in hospitals and pharmacies in the months ahead.
“The transfer from Taleqan only resolves part of Tehran’s shortage and is not meant to eliminate it altogether,” said Mohammad Javad Zareian, head of the Research Center for Water Resources Studies at the Energy Ministry’s Water Research Institute. “If rainfall deficits continue, Taleqan’s water will not be sufficient.”
The Taleqan Dam, located in Alborz Province, is a hydroelectric facility with an installed capacity of 18 megawatts and serves as one of the five primary water sources supplying the Tehran metropolitan area.
Iran is in its sixth consecutive year of drought, with reservoirs at historic lows. Tehran's Latyan Dam is at its lowest in six decades, Karaj (Amir Kabir) holds under 10% capacity, and Mashhad's dams are below 3%.
Reserves depleted after years of overuse
Iran has faced droughts before, Zareian said, but the past two years have been more severe because buffers that once absorbed shocks have largely vanished. “Previously we had groundwater and storage behind dams, but those have been lost because consumption has exceeded available resources,” he said, adding that errors in water policy and population growth planning compounded the strain.
Long-term trends are moving in the wrong direction, Zareian warned, with declining resources and rising population. Climate change is also intensifying pressure by raising temperatures and reducing precipitation, a pattern seen beyond Iran.
The prolonged dry period has pushed reservoir levels across Iran to historic lows. The crisis is mainly due to decades of mismanagement. Agriculture uses 80 to 90 percent of the country's water but with less than 40 percent efficiency.
Too many dams have been built, leaky pipes waste 15 to 30 percent of supply, wastewater recycling stands at only about 20 percent compared to 85 to 98 percent in neighboring countries, and conservation efforts remain weak.
Separate livelihoods from drinking water
Zareian argued that Tehran and other large cities must separate livelihoods and economic activity from drinking water needs. Household drinking water accounts for only part of total use, he said, while many industries clustered around major cities are water-intensive.
“Except for high-tech sectors, most industries here consume large amounts of water,” Zareian said. He urged factories to cut consumption or rely on recycling within their own systems, a practice common abroad where industrial water is reused multiple times.
Proposals to pipe desalinated seawater to Tehran are economically unsound, Zareian said, citing prohibitive costs that would require massive state subsidies. “With one-tenth of that cost, demand management can stabilize conditions,” he said.
If rainfall fails to recover, authorities will have little choice but to impose consumption limits, he added, noting that drinking water would remain the priority.
