Iran’s rial nears 2 million per dollar as US moves to choke off Tehran’s economy

Iran’s rial is edging towards 2 million to the US dollar on the unofficial market as Washington steps up its campaign to deprive Tehran of the money needed to sustain its economy and government.

The currency traded at about 1.992 million rials to the dollar on Monday, according to Bonbast, a website that tracks Iran’s unofficial exchange market. That was roughly 4.5 per cent weaker than before US President Donald Trump announced a “crushing economic operation” against Iran last week.

The sharp fall comes as the Trump administration prepares a new phase of economic pressure against Iran after months of war, with US Treasury Secretary Scott Bessent promising what he described as the most powerful financial offensive ever directed at an adversary.

‘Economic D-Day’

US Treasury Secretary Scott Bessent said on Monday that the US was moving from military action to an intensified effort to squeeze Iran financially.

“At dawn begins an economic D-Day — the single greatest financial offensive ever marshaled against an adversary,” he said.

The Treasury secretary said the administration was prepared to use the full range of its powers against Iran and those helping keep its economy connected to international markets.

“Our objective is to sever every economic lifeline that sustains the tyrannical regime until Tehran stands alone,” Bessent said.

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He also claimed that US military action had devastated Iran’s military-industrial capacity and effectively ended its nuclear programme. Those claims have not been independently assessed in Bessent’s statement.

What Washington will do next remains unclear. The Treasury Department has not yet set out a detailed list of the new measures. But Bessent’s comments indicate that the administration intends to target more than Iran itself, potentially increasing pressure on companies, banks, trading networks and foreign governments that continue to provide Tehran with commercial or financial links.

Iran’s access to dollars is shrinking

The rial’s decline reflects a more immediate problem for Tehran: its access to foreign currency is coming under growing strain.

Iran relies heavily on export earnings, particularly from crude oil, to bring dollars and other hard currencies into the country. Those inflows are now under severe pressure.

Central Bank Governor Abdolnaser Hemmati said last week that Iran’s crude exports had “virtually stopped”, a potentially serious blow to government finances and the supply of foreign exchange.

The United Arab Emirates, an important commercial partner for Iran, also suspended financial transactions with the country until further notice last week, further complicating Tehran’s ability to settle trade and move money.

Iranian financial daily Donya-e Eqtesad attributed the currency’s weakness to problems with foreign-exchange transfers and lower exports. At the same time, demand for imports and expectations of higher prices have increased pressure on the rial.

For ordinary Iranians and businesses, a weaker currency raises the cost of imported goods and can fuel inflation. It also encourages demand for dollars and other foreign currencies, creating a cycle that can make it harder for authorities to stabilise the exchange rate.

Economic pressure follows months of war

Iran entered the current conflict with an economy already weakened by years of sanctions and restricted access to international finance.

Nearly six months of war have added another layer of pressure. Infrastructure has been repeatedly damaged, trade has been disrupted and the government is now facing a more difficult task of protecting its remaining sources of revenue.

The conflict has also disrupted shipping through the Strait of Hormuz, one of the world’s most important routes for oil and energy trade.

Iran has restricted the passage of unauthorised tankers, bringing commercial traffic close to a standstill and adding to concerns over global oil supplies. Tehran continues to possess missiles and drones capable of threatening shipping and regional targets despite the damage inflicted on its military during the conflict.

The US now appears to be betting that economic pressure can achieve what military action alone has not: force Tehran into a position where its ability to finance the state and sustain the war is severely constrained.

Tehran looks east

Iran, however, is signalling that it will seek help from economic partners outside the Western financial system.

China, which remains the biggest buyer of Iranian oil, has opposed Washington’s pressure campaign and called for a diplomatic resolution to the conflict.

Foreign Minister Abbas Araghchi said Iran would look more closely at organisations such as BRICS and the Shanghai Cooperation Organisation as it seeks alternatives to Western-dominated financial and trading systems.

“We believe that structures such as the Shanghai Cooperation Organisation and the BRICS group are effective instruments for breaking the monopoly of power and moving toward a fairer international order,” Araghchi wrote in the state-run Ettela’at newspaper.

“Iran is determined to make the most of these opportunities,” he added.

(With inputs from agencies.)