Iranian Rial Hits Record Low as U.S. Prepares Tougher Sanctions

Iran’s currency fell to a new all-time low today (Monday), as the United States prepares to increase economic pressure on Tehran with another package of sanctions. At the opening of trading in the foreign-exchange markets, the rial reached 2.02 million to the dollar, the lowest level ever recorded.

The Iranian central bank’s official rate stands at about 1.5 million rials to the dollar. The currency’s decline began even before the Israeli and U.S. attack on Iran on February 28, at a time when the local economy was already grappling with double-digit inflation and negative growth. Nearly six months of war have since worsened the crisis and pushed the rial to a new low.

The damage is being felt clearly in ordinary citizens’ wallets. Since the war began, rice prices have risen by about 60%, while beef prices have jumped by more than 150%. At the same time, the International Monetary Fund projects that Iran’s gross domestic product will shrink by more than 5%.

Despite the worsening economic crisis, the pressure has not yet translated into significant political pressure on the regime. Tehran continues to attack and threaten ships in the Strait of Hormuz, through which about one-fifth of the world’s traded oil passed before the conflict. Iran is now refusing to fully reopen the route unless it can collect payment from vessels passing through it.

In an effort to break the deadlock, the Trump administration announced that even tougher sanctions than those already imposed on Iran will be unveiled this evening. Among other measures, they are expected to include secondary sanctions against countries that continue doing business with Tehran.

U.S. Treasury Secretary Scott Bessent wrote yesterday in an op-ed in the Financial Times: “President Trump has devastated Iran’s economy to the point where the rial has never been weaker, and inflation has almost never been higher.” He added: “The regime’s last refuge now lies in the self-deception of fearful countries that still believe accommodating aggression can secure lasting peace.”

Pressure on Iran has already begun expanding across the region. Last week, the United Arab Emirates announced that it was suspending all trade with Iran. The move is particularly significant because the UAE has long been considered one of Iran’s largest trading partners and its largest source of imports.

In Tehran, officials responded with a warning. Iranian Foreign Ministry spokesperson Esmail Baghaei told reporters today that “any escalation in this situation will undoubtedly bring consequences.” According to him, “our hands are not tied.”