Iranian currency falls to historic low ahead of US "economic blow"

The Iranian rial fell to a historic low on the eve of the United States announcing a new package of measures to economically isolate Tehran. On the free market, the dollar rate for the first time exceeded 2 million rials.

On Sunday evening, the dollar was trading above 200 thousand tomans, or more than 2 million rials, as one toman is worth ten rials. Even at the beginning of the previous week, the rate was around 1.865 million rials per dollar, meaning that in less than seven days the Iranian currency lost more than 7% of its value.

The fall of the rial comes amid anticipation of a new US campaign against the Iranian economy. US Treasury Secretary Scott Bessent is due to present on August 24 the details of measures that Washington calls its largest-ever financial operation to economically isolate an adversary.

The United States says the new measures will target not only Iran directly, but also companies, banks, and other entities in third countries that help Tehran sell oil, process payments, and circumvent existing restrictions. One of the key pressure points could be Chinese buyers of Iranian oil and the financial institutions that service such transactions.

The Iranian economy is under severe strain even before the new package is announced. It is simultaneously affected by years of international sanctions, declining oil revenues, high inflation, and the consequences of the nearly six-month-long war with the United States.

An additional blow has been the sharp reduction in oil exports. Iranian crude shipments to Asia have nearly halted recently, and the American blockade has complicated tanker traffic in the Persian Gulf. This limits the inflow of foreign currency into the country and increases pressure on the rial.

Washington is also trying to cut off Tehran's informal financial channels. In early August, the US Treasury imposed sanctions on several international networks that, according to its data, helped the Iranian banking system move hundreds of millions of dollars.

Tehran says the new US campaign will not achieve its stated goal and that Iran has the capacity to continue trade relations with other countries. At the same time, the record fall of the rial indicates growing domestic concerns about access to foreign currency, oil revenues, and further tightening of financial restrictions.

Source: Bloomberg, Financial Times