Iranian rial falls to record low amid war, energy crisis, and anticipation of Trump
Currency’s value has dropped more than 10% since US election, while an energy crisis at home, exacerbated by sanctions, shutters schools and government offices amid cold winter
The Iranian rial on Wednesday fell to its lowest level in history, losing more than 10% of its value since Donald Trump won the US presidential election in November and signaling new challenges for Tehran as it remains locked in the wars raging in the Middle East.
The rial traded at 777,000 rials to the dollar, traders in Tehran said, down from 703,000 rials on the day Trump won.
Iran’s Central Bank has in the past flooded the market with more hard currencies in an attempt to improve the rate.
In an interview with state television Tuesday night, Central Bank Gov. Mohammad Reza Farzin said that the supply of foreign currency would increase and the exchange rate would be stabilized. He said that $220 million had been injected into the currency market.
The currency plunged as Iran ordered the closure of schools, universities, and government offices on Wednesday due to a worsening energy crisis exacerbated by harsh winter conditions. The crisis follows a summer of blackouts and is now compounded by severe cold, snow and air pollution.
Despite Iran’s vast natural gas and oil reserves, years of underinvestment and sanctions have left the energy sector ill-prepared for seasonal surges, leading to rolling blackouts and gas shortages.
It was also reported Wednesday that Iran’s paramilitary Islamic Revolutionary Guard Corps have tightened their grip on the country’s oil industry, and control up to half the exports that generate most of Tehran’s revenue and fund its proxies across the Middle East.
Last October, Iranian ally Hamas attacked Israel, killing some 1,200 people and taking 251 hostages, starting an ongoing multi-front war that other Iranian proxies throughout the region have joined. Iran itself, which is committed to Israel’s destruction, has also directly attacked the country twice since the war broke out.
Tehran also faces crippling sanctions over its nuclear program, which it says is peaceful but involves uranium enrichment to near weapons-grade levels, beyond civilian necessity.
In 2015, during Iran’s pact with world powers to roll back the program in exchange for sanctions relief, the rial was at 32,000 to $1.
On July 30, the day that Iran’s President Masoud Pezeshkian, elected on a promise to ease the sanctions, was sworn in and began his term, the rate was 584,000 to $1.
Trump, during his first term in office, unilaterally withdrew the US from the nuclear accord in 2018, and imposed a “maximum pressure” campaign of sanctions.
Iran denies seeking a nuclear weapon, but US intelligence agencies and the IAEA say the country had an organized military nuclear program up until 2003, and Israel contends it never truly abandoned the program.
The Times of Israel Community.