Iran rial crashes to record low as US blockade fans economic crisis

Iran’s currency crisis is spiralling again. The Iranian rial plunged to a record low of 1.8 million to the US dollar, as a fragile ceasefire with the US and Israel did little to stabilise a deeply strained economy, AP reported.

The slide marks a sharp reversal from the early weeks of the war that began on February 28, when limited trading activity and a near halt in imports had temporarily kept the currency stable. That cushion has now worn off.

The rial began weakening just two days ago, before slipping to its weakest-ever level on Wednesday, April 29, signalling that underlying economic stress is resurfacing despite the pause in hostilities.

Experts warn the depreciation could accelerate inflation in an economy heavily reliant on imports. From food and medicines to electronics and industrial raw materials, most essential goods are directly exposed to dollar movements.

Blockade, not war alone, is tightening the screws

Even as the war has moved into a ceasefire phase, a continuing US blockade is compounding the crisis.

The blockade has choked a key revenue lifeline for Iran by disrupting oil exports — a critical source of both government income and foreign exchange reserves. With fewer dollars flowing into the system, pressure on the rial has intensified.

Inflation risks resurface, households feel the pinch

The latest currency shock comes months after a similar slide triggered nationwide protests in January. Back then, the rial weakened from about 1.4 million to 1.6 million per dollar within a week, fuelling public anger over rising living costs.

Now, the impact is once again visible at the ground level.

Prices of essential goods — including milk, yogurt, cooking oil, bread, rice, cheese and detergents — have already been climbing over the past two weeks. The latest fall in the rial is expected to push them even higher.

The broader inflationary pressure is being driven by a mix of factors: post-war uncertainty, supply chain disruptions, rising transport and production costs, and the continued impact of the blockade.

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Job cuts

The economic stress is now spilling into the labour market.

According to reports, layoffs have begun across sectors. Around 500 workers at Pinak in Rasht and 700 workers at Borujerd Textile Factory have reportedly lost their jobs since late March, after their contracts were not renewed.

The cuts underscore growing concerns that companies, squeezed by rising input costs and weakening demand, are beginning to downsize or hold back on hiring.

Iran’s economy has long battled sanctions, chronic inflation, and a widening gap between official and open-market exchange rates. The recent war has only deepened these structural challenges.

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With the currency under fresh pressure and external constraints still in place, the road ahead looks increasingly uncertain — for both businesses and households.

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