FX.co ★ Iran’s rial tumbles to record low amid ongoing military conflict

On Tuesday, September 29, Iran’s rial plunged to a fresh record low in the open market, trading at about 2.5 million rials to the US dollar. The sharp fall came just 27 days after the previous low when the greenback approached 2.2 million rials on September 2. According to the Associated Press, this illustrates how the prolonged Middle East conflict is steadily draining the economy of the BRICS member.

The currency crisis is forcing Tehran into unpopular fiscal moves to rein in a widening budget shortfall. In early September, authorities doubled the price of unsubsidized gasoline: from September 8, the third‑tier pump price rose to 100,000 rials per litre from 50,000 rials (roughly 4-5 US cents). Spiralling inflation and collapsing purchasing power also prompted the central bank to issue a 10‑million‑rial banknote in late March, the largest denomination in the country’s history.

Analysts attribute the rial’s accelerated decline to harsher sanctions and a maritime blockade that has disrupted oil exports and cut off a crucial stream of foreign currency receipts. As savings lose value and consumer prices jump, households are increasingly shifting assets into hard currency and precious metals, adding further strain to Iran’s fragile financial system.