The US dollar surged past the 700,000 rials mark on Saturday again, reversing a brief period of relative stability, after Iran was censured for lack of cooperation with the UN's nuclear watchdog this week.
The milestone highlights the deepening economic strain in Iran, fueled by escalating geopolitical tensions and challenging domestic policy decisions.
A recent resolution from the International Atomic Energy Agency (IAEA) Board of Governors criticized Iran’s lack of cooperation on nuclear matters, prompting Tehran to threaten an escalation in uranium enrichment. Calls for producing nuclear weapons by some Iranian officials, combined with fears of more and stricter international sanctions, have further shaken confidence in the Iranian economy.
The rial’s value has plummeted over 20-fold since the 2015 nuclear agreement with world powers. Compared to its value at the time of the 1979 revolution, the currency has depreciated to just 1/10,000 of its original worth.
Last year in November, the dollar was trading at approximately 500,000 rials. By contrast, the sharp rise in recent months has been fueled by escalating tensions between the Islamic Republic and Israel.
Since the Iranian calendar year began in March, military confrontations—such as missile and drone attacks launched by the Islamic Revolutionary Guard Corps on Israeli targets also contributed to the rial's fall.
October marked the beginning of another downward trend. The dollar climbed to 690,000 rials on October 26 following an Israeli airstrike on military targets in Iran.
This upward momentum was reinforced by geopolitical developments, such as Donald Trump’s victory in the US presidential election and news of the IAEA resolution. On November 23, the dollar reached the 700,000 rials threshold again, signaling potential inflationary pressures in the months ahead.
The IAEA resolution on Thursday, supported by the United States, Britain, France, and Germany, called on Tehran to improve cooperation and clarify its nuclear activities. In response, Iran’s Atomic Energy Organization announced plans to increase uranium enrichment.
The potential activation of the snapback mechanism after the resolution could reintroduce sanctions lifted under the 2015 nuclear deal, likely deepening Iran’s economic woes. Such measures would mirror the international pressure during Mahmoud Ahmadinejad’s presidency, when the country faced severe economic and diplomatic isolation.
Iran's economy is also facing other challenges, such as shortages of natural gas and electricity, reducing industrial production, exports and earnings in foreign currency.