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The US hit a record high against the Iranian rial in Tehran’s free market on Saturday, surpassing 1.94 million rials as mounting military and political tensions fueled a fresh sell-off in Iran’s currency and heightened concerns over another wave of inflation.
The dollar traded at 1.941 million rials, marking a record high and an increase of 32,000 rials, or 1.67%, from the previous day’s unofficial closing rate.
The euro also pushed higher, trading at 2.22 million rials, up 36,000 rials, or 1.64%, from Friday’s unofficial close.
The latest surge means the Iranian rial has lost around 43.7% of its value against the US dollar since the beginning of the year, when the dollar was trading at around 1.35 million rials on Tehran’s free market.
It climbed to 1.72 million rials following the launch of US and Israeli air strikes on Iran on February 28.
As the conflict disrupted economic and commercial activity, demand for foreign currency temporarily weakened, and the dollar retreated to around 1.46 million rials.
Following Donald Trump’s threat on 7 April to launch air strikes against Iran’s critical infrastructure, the dollar rebounded to 1.63 million rials before easing to roughly 1.525 million rials after a ceasefire was announced.
The resumption of economic activity, coupled with government estimates putting wartime damage at $300 billion, renewed pressure on the foreign exchange market and pushed the dollar close to 1.9 million rials.
The “memorandum of understanding” signed between Tehran and Washington briefly restored confidence, sending the exchange rate back to 1.53 million rials.
However, renewed political tensions between the two countries soon reversed those gains, lifting the dollar back to around 1.7 million rials.
The rial has since come under more pressure following the launch of a fresh naval blockade of Iran and US air strikes on the country’s southern regions, operations Washington says are intended to degrade Iran’s military capabilities and prevent threats to shipping through the Strait of Hormuz.
The latest escalation has intensified expectations of further currency depreciation and faster inflation.
Official data points to an economy already grappling with severe price pressures.
Inflation has accelerated markedly in recent months. Annual consumer price inflation, which stood at 52.6% in December 2025, rose to about 68% in February 2026 before reaching 88.6% last month. Iran’s inflation rate has now climbed to its highest level since the Second World War.
Persistently high inflation and rapid monetary expansion continue to erode the purchasing power of the rial, while geopolitical instability has accelerated the currency’s depreciation.
A weaker rial, in turn, raises import costs, fuels inflation expectations and drives prices even higher, creating a cycle that is placing increasing strain on household incomes and the country’s broader macroeconomic stability.