As tensions in the Middle East escalated over the past four months since Iranian-backed Hamas' terrorist attack in southern Israel, Iran's currency has reportedly tumbled 17% against the U.S. dollar and inflation has soared above 40%.
On Oct. 6, the day before Hamas' attack, the U.S. dollar was worth 498,000 rials on Tehran's free currency market, euronews.com reported Monday. But the rial dropped to 582,500 against the U.S. dollar on Sunday, the day Iranian-backed terrorists killed three U.S. soldiers and injured 34 others with a drone attack in Jordan.
The Iranian currency has fallen about 13-fold since 2018, when Donald Trump pulled the U.S. out of the Iran nuclear deal and imposed sanctions on Tehran's oil exports and international banking, International Iran, a Persian-language TV network in London aimed at Iranian viewers, reported.
Also, according to Iran International, the price of the British pound was traded for 714,200 rials and one euro fetched 610,00 rials on Tehran's free currency market, which despite some official exchange rates, reflects the real value of the rial against foreign currencies.
The Central Bank of Iran has said it does not accept the exchange rate of the free market, Euronews reported. The Central Bank considers the rate set by the Iran Center for Exchange to be official, which has increased by 4.1% since Oct. 6 and reached 429,210 rials to the dollar.
The fear of a potential war with the U.S. has also split from the currency market over the Tehran Stock Exchange, whose index (TEDPIX) lost about 1% by early Monday afternoon and more than 4% altogether in the past 40 days, Euronews reported.
The diminishing value of the rial signals further inflationary pressures in the months ahead, Iran International reported. Wages for workers, who are averaging less than $200 a month, magnify the challenges with an economy where inflation outpaces salary adjustments. Iran's inflation rate was as high as 55.5% in April, according to Trading Economics, and was 40.2% in December. Such economic strains have led to strikes and protests, including oil and gas production platforms and refineries.
Iran's leading economic newspaper Donya-e-Eqtesad reported the ramifications of Trump's potential return to the White House are a factor contributing to the rise of foreign currencies and the price of gold, according to Iran International. The paper also noted regional instabilities, particularly in the Red Sea, as factors fueling economic insecurity among Iranian investors.
Last week, the devaluation of the rial intensified following Iran's ballistic missile strikes on targets in Iraq and Pakistan. Tensions were already heightened because of Iranian-backed Houthis rebels' strikes against the U.S. Navy and commercial vessels in the Red Sea.