Iranian Rial Plunges to Record Low as Sanctions Intensify Economic Strain

Key Moments

Iran’s rial slid to an unprecedented rate of 1.2 million per U.S. dollar, deepening pressure on an already weak economy under nuclear-related sanctions.
The currency’s collapse is pushing up the cost of staples such as meat and rice. As a result, Iranians’ purchasing power continues to erode.
The deterioration follows years of sanctions after the U.S. exit from the 2015 nuclear agreement and the subsequent U.N. “snapback” sanctions targeting assets, arms transfers, and missile-linked activity.

Rial Hits New Lows Amid Stalled Nuclear Talks

TEHRAN, Iran (AP) – Iran’s currency weakened sharply on Wednesday, with the rial dropping to a record low of 1.2 million against the U.S. dollar as nuclear-related sanctions continued to weigh on Tehran’s struggling economy.

Currency traders were quoting the new rate at a time when efforts to revive negotiations between the United States and Iran over Tehran’s nuclear program appeared to have stalled. The lack of progress on diplomacy has added to the sense of uncertainty in financial markets and among the wider population.

Rising Living Costs Squeeze Households

The steep depreciation of the rial has been feeding directly into consumer prices, intensifying pressure on Iranian households. The surge in the exchange rate is driving up food costs. In particular, prices for meat, rice, and other staples are rising sharply. For many residents, the worsening currency situation has made day-to-day life increasingly difficult.

Concerns go beyond immediate household budgets. Many Iranians also worry about the broader effects of the country’s reduced access to foreign currency. This shortage threatens the government’s ability to fund essential services and maintain critical infrastructure.

“Life will not only become more difficult for ordinary people, but it will also fuel public concern over whether the government — given the limited inflow of foreign currency caused by sanctions — has the resources to maintain and repair the country’s aging infrastructure,” said Ali Moshtagh, a 53-year-old electrical engineer.

Geopolitical Tensions Add to Economic Pressures

The currency turmoil has been unfolding against a backdrop of heightened regional tensions. Many Iranians are increasingly worried about the possibility of renewed confrontation between Iran and Israel, and potentially the United States, following a 12-day conflict in June. Those fears are compounding the economic anxiety caused by sanctions and the rial’s decline.

From Nuclear Deal to “Maximum Pressure”

Iran’s economic challenges intensified after international sanctions were reactivated. This shift followed changes in U.S. policy on Tehran’s nuclear program. The country’s economy has been deeply affected by these measures, particularly after U.S. President Donald Trump withdrew the United States from Iran’s nuclear agreement with world powers in 2018.

Under the 2015 nuclear deal, Iran agreed to sharply curb its uranium enrichment and stockpiling activities. In return, it received relief from international sanctions. At that time, the rial traded at 32,000 to the dollar, a level far stronger than the current exchange rate of 1.2 million to the dollar.

After President Trump returned to the White House for his second term in January, Washington resumed its ‘maximum pressure’ approach toward Tehran. The administration reimposed a series of sanctions. These measures targeted companies trading Iranian crude oil, even when the oil was sold at a discount to buyers in China.

Period / Event	Policy / Development	Rial Exchange Rate (per U.S. dollar)
2015 nuclear deal	Iran limits uranium enrichment and stockpiles in return for sanctions relief	32,000
2018 U.S. withdrawal from deal	U.S. exits agreement and reimposes sanctions on Iran	Not specified
After renewed “maximum pressure” campaign	U.S. targets Iranian crude exports and related firms	Not specified
Latest development	Rial hits record low amid ongoing sanctions and stalled talks	1.2 million

U.N. “Snapback” Sanctions Reinforce Isolation

Additional pressure came from the United Nations in late September. Nuclear-related sanctions on Iran were restored through what diplomats called the ‘snapback’ mechanism. These measures froze Iranian assets held abroad and blocked arms transactions with Tehran. They also imposed penalties on activities linked to Iran’s ballistic missile program.

The combination of U.S. unilateral sanctions, the renewed U.N. measures, and stalled diplomatic engagement has left Iran’s economy under sustained strain, with the historic plunge in the rial serving as a visible sign of the country’s deepening financial distress.