Iran’s Rial Hits Historic Low as Dollar Surpasses 100,000 Tomans
Sources in Iran’s currency market report that the U.S. dollar has reached 100,000 tomans, with some indicating it has already passed that mark—setting a new record for the decline in the rial’s value. In today’s free-market trading, the euro was around 108,000 tomans and the British pound 128,000 tomans.
Multiple factors appear to be fueling this surge in foreign exchange rates, including escalating tensions between Iran and the United States following recent remarks by Donald Trump, Israeli attacks on Gaza, fears of further devaluation of the Iranian currency, and a bleak economic outlook. Toward the end of the Iranian calendar year, currency prices often rise; some observers link this pattern to the government’s efforts to address budget deficits, though officials have repeatedly denied such accusations.
The gold market has mirrored this volatility. The new-design gold coin (Emami) approached 94 million tomans, while the old-design coin (Bahar Azadi) neared 84 million tomans. Meanwhile, global gold prices rose to USD 3,020 per ounce, buoyed by a weakened U.S. dollar, Middle East crises, economic uncertainty, and safe-haven demand. Gold, traditionally seen as a secure investment in times of crisis, has climbed 15% since the start of the year.
In the Tehran Stock Exchange (TSE), the overall index dropped by 34,359 points on the final trading day of the year, reflecting a shift of capital from the stock market to parallel markets. Early this morning, Donald Trump’s warning that Iran would be held responsible for any attacks by the Houthis, with the promise of “severe” consequences, rattled investors, further boosting demand for foreign currency and gold.
Over the past months, Iran’s currency market has seen rapid increases, culminating in the dollar’s jump from about 60,000 tomans to 100,000 tomans under Masoud Pezeshkian’s administration—a roughly 60% rise in under six months. As the year closes, the U.S. Department of the Treasury announced new sanctions aimed at reducing Iranian oil exports and weakening the national currency. A total of 18 companies, 13 ships, and Iran’s Oil Minister Mohsen Paknejad were sanctioned, alongside several entities in China and India accused of facilitating Iranian oil shipments. According to the Treasury, these measures target Iran’s “shadow fleet” and seek to drive its oil exports toward zero.
Domestically, the Iranian Parliament’s Program, Budget, and Audit Commission indicates that the budget deficit for the upcoming fiscal year has surpassed 1,500 trillion tomans, while an advisor to the President of the Tehran Chamber of Commerce previously estimated the operational deficit at about 1,805 trillion tomans. At the same time, liquidity has soared to 9,603 trillion tomans—nearly five times its level six years ago—without corresponding growth in the production of goods and services, heightening inflationary pressures.
Year-on-year inflation in February (Bahman) held at 32%, but point-to-point and monthly figures hint at further price hikes in the coming months. Experts who have examined inflation trends over two-, four-, and eight-year spans warn of a deepening structural crisis. Two-year inflation rose from 107% in 1399 to 123.1% in 1402, four-year inflation reached 379%, and the eight-year rate—around 1,000% in 1402—now hovers near 1,500% and could exceed 1,600% soon. This implies a 16-fold rise in the price of typical household goods over just eight years.
Economist Bahaeddin Hosseini-Hashsemi notes that ongoing budget deficits, excessive bank borrowing, and heightened external threats make short-term exchange-rate predictions very difficult. He observes that currency rates generally move in line with the national inflation rate—around 30–40%—and can jump even more due to inflationary expectations and foreign policy tensions. With new sanctions likely increasing the costs of exports and sanctions evasion, upward pressure on the exchange rate is expected to persist. Hosseini-Hashsemi adds that Iran’s banking system, largely disconnected from global financial networks, faces steep hurdles in international transactions, further increasing costs and risks.
Overall, the Iranian economy is grappling with high inflation, soaring liquidity, rising budget deficits, and renewed external pressure from tougher sanctions. Without significant structural reforms and improved global relations, the currency market looks set to remain volatile, and the country’s economic challenges could continue to deepen.