By Euronews Persian
Published on •Updated
The US dollar broke above 2.1 million Iranian rials on Tehran’s free market on Wednesday, setting a new record as the rial lost around 60% of its value against the dollar since the start of the Iranian calendar year in March — when the dollar traded at approximately 1.35 million rials.
The rial’s slide has accelerated since the US reimposed a naval blockade on Iranian ports in July, following the collapse of a short-lived ceasefire.
The euro hit an unprecedented 2.55 million rials, and the UK pound reached 2,976,000 rials.
The UAE dirham, which serves as the benchmark for pricing the rial on regional markets, reached 600,000 rials for the first time.
One gram of 18-carat gold climbed above 225.7 million rials, and the Imami gold coin — a standard unit of value in Iran — changed hands at 2.26 billion rials.
Iran operates a dual exchange rate system. The official rate, set by the Central Bank and used for state transactions and subsidised imports of essential goods, is significantly stronger than the free market rate available to ordinary Iranians and businesses.
The gap between the two has widened sharply since the war began, with the free market rate now more than double the official rate.
The rial has been in freefall since the US-Israeli strikes against Iran on 28 February launched the ongoing war, now in its seventh month, and has accelerated as Washington has tightened its economic pressure campaign.
The US Treasury has cut off Iran’s access to regional banks, severing one of the Islamic Republic’s main channels for accessing foreign currency and clearing import payments.
The naval blockade of Iranian ports has compounded the pressure by restricting trade routes and reducing Iran’s oil export revenues.
Abdolnaser Hemmati, governor of the Central Bank of Iran, said the bank was ready to inject $2 billion into the foreign exchange market to stabilise the rial. He attributed the latest slide primarily to psychological factors rather than fundamental economic ones.
“The dust created in the foreign exchange market will settle, and the recent increase in exchange rates is driven more by psychological factors than by real economic factors,” he said.
Hemmati acknowledged that inflation had placed heavy pressure on households.
“Although inflation and rising prices have placed heavy pressure on people’s livelihoods and daily lives, and these difficulties are tangible, the Central Bank has been able to control the accelerating pace of inflation by using monetary, supervisory and prudential tools,” he said.
He rejected US claims that Tehran lacked access to financial reserves.
“These claims are completely baseless. The reserves have not been frozen, and the Central Bank has access to stable resources as well as multiple oil and non-oil revenues,” he said, claiming that more than $18 billion in foreign currency had been provided for imports of essential goods, medicines, animal feed and raw materials since March.
He provided no further details to support the figure.
The rial’s collapse is feeding directly into consumer prices. Iran was already experiencing high inflation before the war, while the currency’s further depreciation has raised the cost of all imported goods, raw materials and energy inputs.
Iranians who hold savings in rials have seen their purchasing power roughly halved in less than six months. Gold and hard currency have become the primary store of value for those who can access them.
Iran’s official currency is the rial, although most Iranians conduct everyday transactions in tomans — a colloquial unit equal to 10 rials that is so deeply embedded in daily use that shops, restaurants and property listings quote prices almost exclusively in tomans.
At Wednesday’s free-market rate, the US dollar traded at about 220,000 tomans. The government announced plans in 2020 to formally replace the rial with the toman and remove four zeros from the currency, a redenomination that has not yet been fully implemented.