Iran's rial has crashed through the 2 million rial per US dollar threshold to hit a record low of 2.1 million per dollar when informal currency markets opened on Monday, according to latest reports from Mint. US Treasury Secretary Scott Bessent warned that the currency could plunge another 50% against the dollar, writing on X social media platform "3 million, here we come." While Iran's official Central Bank rate remained around 1.5 million rial to the dollar, the informal market rate represents the actual cost most Iranians face. The currency's decline has been accelerated by nearly six months of war following US and Israeli attacks on February 28, compounding existing economic pressures including double-digit inflation and negative growth. Iranians are finding daily staples increasingly unaffordable, with rice prices up 60% and beef prices more than 150% higher since the war began, as reported by Associated Press. The International Monetary Fund forecasts that GDP will contract more than 5%.
The weakening rial has severely impacted Iranian purchasing power, with ₹100 now worth only 2.1 million rials on the free market, according to Mint analysis. According to an Al Jazeera analysis of prices in Tehran, the same amount that could buy around 4 kg of tomatoes, half a kilogram of chicken and slightly less than a litre of cooking oil before the war now gets you half of this amount. The average price of tomatoes has risen 71%, chicken has become 74% more expensive, and cooking oil has surged 177%, as reported by Al Jazeera. The impact extends to essential medicines, with insulin prices jumping 642%, paracetamol becoming 93% more expensive, and baby formula rising 95%. Iran's government-approved minimum wage remains at 166 million rials, equivalent to about ₹7,820, with government assistance bringing the figure to less than 220 million rials or around ₹10,298.
As tensions over the crucial waterway continue, Iran and Oman are reportedly in the final stages of agreeing upon a plan for joint management of the Strait of Hormuz, as reported by Associated Press. The proposed arrangement would allow ships to enter the Persian Gulf through an Iranian-controlled route and exit through an Omani-controlled route. Regional officials confirmed the development comes amid increasingly sharp criticism from Trump, who has threatened to bomb Oman if it gets in the way. Oman's foreign minister was scheduled to travel to Iran on Tuesday for additional talks. The war has devolved into a fight over who controls the strait, through which a fifth of the world's traded oil moved freely before the conflict, with Iran now refusing to fully reopen it unless it can charge ships.
Iran's economic crisis has deepened as the country faces mounting financial pressures, with Central Bank Governor Abdolnaser Hemmati citing simultaneous declines in oil revenues, tax collections, and social security contributions that have affected broad sections of the Iranian economy, according to Associated Press. The pressure has already affected Iran's trading relationships, with the United Arab Emirates suspending all trade with Iran last week, a day after Trump spoke to UAE leader Sheikh Mohammed bin Zayed Al Nahyan. Iranian Foreign Ministry spokesperson Esmail Baghaei told reporters in Tehran on Monday that "any escalation of this situation will undoubtedly bring about consequences," adding "our hands are not tied." As reported by Mint, the economic situation was already challenging under decades of US and international sanctions over Iran's nuclear programme, with the Iran-Israel war pushing the rial into deeper crisis.
Iran has warned countries against backing the new US measures, with hard-line Supreme National Security Council leader Mohsen Rezaei stating that support for American economic measures would be regarded as an "act of war," as reported by The Times of India. Despite the economic pressure, Iran continues to maintain control over shipping through the Strait of Hormuz, a crucial waterway through which a fifth of the world's traded oil moved freely before the conflict. Iranian attacks and threats during the war have severely hampered traffic through the strait, with Iranian-controlled routes becoming increasingly important for regional commerce. Pakistan, which played a key role in brokering a 60-day ceasefire in June, sent a high-level delegation to Iran on Monday to discuss ending the war, according to Associated Press.
