The key facts

  • The rial fell to ~2.7 million per dollar, losing half its value in a year; inflation reached 90%
  • For the first time since 1979, no oil was shipped last month; the US Navy disabled or sank at least eight Iranian tankers
  • Iran's central bank carried out a $2 billion currency intervention but failed to reverse the situation

Iran's economy under dual pressure

Iran is going through one of the most severe economic periods in its history due to a pressure campaign by the United States that combines sanctions with a military blockade, The Economist reports. Abdolnaser Hemmati, the governor of Iran's central bank, when asked about the dire economic situation, recalled the famous Persian proverb about counting chickens in the fall, but the preliminary results of the first autumn month proved extremely grim. According to state media, even Mohsen Rezaei, a security official known for his loud statements, warned colleagues that the country is going through one of the most difficult periods in its history. The publication notes that economic crises are nothing new for Iran, but the current one is proceeding worse than previous ones. It remains uncertain whether the pressure, continuing amid a war now in its eighth month, will force Iran to stop it.

The rial's fall and record inflation

The Iranian rial continues to set anti-records: the dollar now costs about 2.7 million rials, and since the beginning of the year the national currency has lost half its value. Last month the central bank carried out an intervention in the domestic market, selling $2 billion worth of currency — this somewhat slowed the depreciation but did not fix the situation. The currency crisis has led to a sharp spike in annual inflation: in September it reached 90% — the highest level since World War II. Prices for food and transport rose by more than 115%, clothing by 97%, and the cost of the most essential goods, including vegetable oil, eggs and rice, rose by more than 200%. According to the nurses' association, many medical workers prefer to quit rather than work for a salary now equivalent to just $100 a month.

Sanctions backed by military force

Previously, Iran had managed to circumvent even the harshest American sanctions: according to the publication, even in 2020, at the peak of Donald Trump's 'maximum pressure' campaign and the COVID-19 pandemic, the country sold more than 440,000 barrels of oil per day. Now, however, Washington is enforcing the sanctions with military force: American warships are blockading Iranian ports, and in the past month alone they disabled or sank at least eight Iranian oil tankers. For the first time since 1979, no petroleum products were shipped for export last month.