Iran rial hits new record low of 1.31 million to the dollar
Iran’s currency hit a fresh low on Monday of 1.312 million rials to the US dollar on the open market according to currency-tracking websites, reflecting deep economic woes in the country.
Iran’s currency hit a fresh low on Monday of 1.312 million rials to the US dollar on the open market according to currency-tracking websites, reflecting deep economic woes in the country.
The dollar later eased slightly but continued to trade with wide volatility around 1.31 million rials. The euro was traded at about 1.54 million rials and the pound sterling at roughly 1.750 million rials.
The rial’s decline surpassed a previous record of 1.28 million rials per US dollar on Saturday, as Iran introduced a three-tier gasoline pricing system, including sales at 50,000 rials per liter which took effect nationwide in the early hours of the day.
It also surpassed an earlier record of 1.17 million rials per US dollar on September 30, after European countries moved to reimpose UN sanctions on Iran over its disputed nuclear program, tightening external constraints on the Iranian economy.
The latest slide comes amid soaring inflation, renewed volatility in Iran’s unofficial markets and continued uncertainty over stalled nuclear talks with the United States.
The rial, which traded at about 140,000 per US dollar in 2018, has lost just over eight times its value since Donald Trump restored US sanctions on Iran during his first term.
US talks with Tehran over its disputed nuclear program began earlier this year with a 60-day ultimatum. On the 61st day, June 13, Israel launched a surprise military campaign which was capped with US strikes on June 22 targeting key nuclear sites in Esfahan, Natanz and Fordow.
Iran denies seeking nuclear weapons and has called the attacks illegal.
The United States has demanded Iran renounce domestic uranium enrichment while Tehran maintains its nuclear program is an international right.
Babak Mesbahi, a presidium member of the Iranian Pharmacists Association, said sanctions are indirectly choking payment channels and logistics.
“Based on recent officials’ statements, the country’s medicine reserves on average are less than two months,” he said. “Infant formula faces a similar situation, and about 800 items will face shortages over the next three months.”
Mesbahi told Didban Iran that “Sanctions do not directly target medicine and infant formula, but their side effects are entirely palpable. Currency transfers have become difficult and allocation faces problems, and these issues are directly caused by sanctions.”
Asked whether the government has eased FX transfers, Mesbahi said: “As far as I know, nothing specific has been done. Right now there are pro forma invoices that have remained four to five months in the allocation and transfer queue,” he added.
The end of preferential exchange rates on many imported inputs has accelerated price rises for finished medicines and raw materials, according to pharmacists’ associations.
Hadi Ahmadi, a board member of the Iranian Pharmacists Association, said daily currency volatility and rising input costs are pushing up prices, even for common medicines.
“About 70% of production costs – packaging, auxiliaries and other inputs – follow the free-market exchange rate, and only roughly 30% relates to active ingredients, so price increases are unavoidable,” Ahmadi told ILNA.
“When prices rise and insurance does not keep pace, patients either take incomplete regimens or walk away, and the treatment path is disrupted.”
He added that only two to three million doses of influenza vaccine were imported versus a need of six to seven million for a population near 90 million, and distribution was late, which contributed to wider spread of flu.
“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.
