Iranian Rial’s Depreciation Persists Into Persian New Year

Recent Developments

The Iranian rial struck a record low on March 24, trading at about 613,000 to the U.S. dollar in the unregulated market. Since January, the dollar has appreciated about 21 percent against the rial, and the country’s inflation rate stands at around 46 percent, according to the Iranian Central Bank. Furthermore, the government-funded Statistical Center of Iran reported in late February that prices of certain essential goods within the food and beverage category have increased about 93 percent since last year. The regime in Tehran has been unable to stabilize the market amid the Persian New Year, as civic and labor activists have staged numerous demonstrations in recent weeks to protest Iran’s declining economic climate.

Expert Analysis

“Over the past year, Tehran has grappled with currency depreciation and soaring inflation rates. Data reveals that during the Persian year of 1402 (March 2023-March 2024), the U.S. dollar appreciated against the rial by approximately 24 percent — a notable decrease from the 88 percent surge observed in the preceding year. Despite this, the average annual inflation rate has not seen substantial alleviation. These statistics indicate that a considerable influx of hard currency due to less stringent enforcement of sanctions has slowed the pace of the rial’s depreciation. However, the rapid depreciation of the rial over the last three months shows that the trend is reversible. Furthermore, the Central Bank still faces significant challenges in curbing inflationary pressures.” — Saeed Ghasseminejad, FDD Senior Advisor on Iran and Financial Economics

“Iran’s economic crisis is in part fueled by a substantial capital outflow. Iran’s major trading partners, such as China, Turkey, India, Iraq, and the United Arab Emirates, have reduced imports of Iranian goods, severely draining Iran’s foreign currency revenues. Enforcing the existing sanctions and strictly conditioning sanctions waivers is crucial in restricting Tehran’s access to foreign currencies.” — Janatan Sayeh, FDD Research Analyst

Officials Unable to Stabilize Iran’s Market Despite Empty Promises

Iranian leaders have repeatedly pledged to resolve the country’s economic challenges, but they have failed to significantly curb Iran’s inflation rate or currency devaluation. In March 2023, Iran’s supreme leader, Ayatollah Ali Khamenei, called on regime leaders to prioritize the economy by stabilizing inflation and increasing domestic production and manufacturing. Despite stating in March 2023 that the coming Iranian year’s slogan is “Inflation control, growth in production,” Khamenei admitted on March 20, 2024, that his efforts did not succeed. Characterizing the economy as Iran’s main weak point, Khamenei said that inflation and domestic production are “far from what we envisioned” and that officials cannot resolve key economic issues in only one year.

Related Analysis

“Iranian Rial Plunges to Historic Low,” FDD Flash Brief

“CBI Revoking Bank Melli’s License Is Unlikely to Curb Iran’s Sanction Evasion in Iraq,” by Janatan Sayeh

“To Fight the Rial’s Plunge, Tehran Resorts to Tactics that Failed Before,” by Saeed Ghasseminejad