The situation for the crisis-hit and war-bound Middle East nation, Iran, is falling apart as its currency rial hit rock bottom on Monday. The rial fell to 2.02 million against the US dollar when informal currency markets opened.
The key reasons behind the falling currency to a record low is the latest development that Washington prepared what it called an “economic D-Day”. The fresh sanctions are set to pile more pressure on an economy already battered by existing restrictions and a US naval blockade.
While Iran’s official Central Bank rate was around 1.5 million rial to the dollar, the informal market rate is the one most Iranians pay.
US Treasury Secretary Scott Bessent wrote in the Financial Times that the administration would announce sanctions stronger than those already imposed, including secondary sanctions against countries that continue to do business with Iran.
Bloomberg cited data from tracking website Bonbast to report that the rial was down 4.5% at an all-time low against the dollar.
Iran’s economic crisis:
Since the outbreak of the Iran war, led by US and Israel that began on 28 February, the Iranian economy is facing double-digit inflation, negative growth and hit new record lows.
Despite the distress, US President Donald Trump has not been able to wrangle a deal with Iran, which has kept firm grip on the Strait of Hormuz. The waterway is key, as it is used to transport a fifth of the world’s traded oil, the AP report added.
The Bloomberg report added that Central Bank Governor, Abdolnaser Hemmati last week said that Iran’s crude exports have “virtually stopped”. It added that this came after the United Arab Emirates suspended all financial transactions with Tehran last week till further notice.
Iran’s ties with other countries have also started been affecting which is evident through its trading relationships. The United Arab Emirates announced last week that it was suspending all trade with Iran, a day after Trump spoke to UAE leader Sheikh Mohammed bin Zayed Al Nahyan.
