Iranian rial hits record low amid US economic crackdown

← Back to the feed

Iranian rial hits record low amid US economic crackdown

Developing story first seen 3 hours ago

· 3 hours ago

Iran's currency has sunk to a fresh record low, with the rial trading at 2.02 million to the US dollar as markets opened on Monday, just as Washington prepared to unveil a fresh round of sanctions intended to squeeze Tehran's economy further. The rial had already been sliding before Israel and the US struck Iran on 28 February amid double-digit inflation and negative growth, but nearly six months of war have accelerated the decline, pushing daily staples further out of reach for ordinary Iranians.

Rice prices have risen roughly 60% and beef more than 150% since the war began, and the IMF now forecasts Iran's GDP will contract by more than 5%. Despite the economic pain, Iran retains leverage through its disruption of shipping in the Strait of Hormuz, a corridor that once carried a fifth of the world's traded oil, and is refusing to fully reopen it without being able to charge passing vessels; Iran and Oman are reportedly close to a deal on joint management of the waterway. US Treasury Secretary Scott Bessent said new sanctions, including secondary measures against countries still trading with Iran, would be announced Monday, days after the UAE suspended all trade with Tehran, while Pakistan sent a delegation to Iran to press for an end to the war.

  • Rial hits record low of 2.02 million to the dollar
  • US preparing tougher sanctions, including on Iran's trading partners
  • War has driven up food prices and battered Iran's economy

New here? Start with this

Iran's economy has been under severe strain for years, largely due to US sanctions reimposed after President Trump withdrew from the 2015 nuclear deal in 2018. Those sanctions target Iran's oil exports and access to international banking, and the rial, Iran's currency, has lost most of its value as a result, driving up prices for ordinary Iranians.

The current escalation centres on Scott Bessent, the US Treasury Secretary, who has announced a fresh wave of financial pressure aimed at squeezing Iran's economy further and pushing it back towards nuclear negotiations. Iran has pushed back through officials like Mohsen Rezaei, a senior security figure, who has raised the possibility of disrupting shipping through the Strait of Hormuz, a narrow waterway through which a large share of the world's oil passes.

This matters beyond Iran's borders because the Strait of Hormuz is a critical route for global energy supplies, and any disruption there could affect oil prices worldwide. The standoff also reflects a broader, long-running dispute between Washington and Tehran over Iran's nuclear programme and its influence in the Middle East, with Gulf states such as Saudi Arabia and the UAE caught in the middle as they try to keep their own oil exports flowing.

Both sides, in good faith

The strongest fair case each way — we don't pick a winner.

The case for

Supporters of the US campaign argue that intense economic pressure is a legitimate, lower-cost alternative to military confrontation, using financial leverage rather than force to compel Tehran back to serious negotiations over its nuclear and regional activities. They see rewarding nations that cut ties with Iran, through improved access to capital markets, as a sensible incentive structure that isolates a government they view as destabilising, without risking soldiers' lives. From this perspective, a currency collapse and rising inflation are the predictable and justified cost of years of defiance, and firm resolve now may avert a larger conflict later.

The case against

Critics, including those sympathetic to ordinary Iranians rather than the regime itself, argue that such sweeping sanctions chiefly punish civilians through currency collapse, inflation and shortages, while doing little to change the calculations of entrenched decision-makers insulated from economic hardship. They worry that branding the effort an economic D-Day and threatening third countries with consequences amounts to coercive overreach that infringes on other nations' sovereign trade choices, and that framing this in maximalist, triumphalist terms raises the risk of miscalculation, including confrontation over the Strait of Hormuz, rather than genuinely opening a path to diplomacy.

Coverage

Americas Business Economy Geopolitics Middle East Politics World

Read the full article at the source →