Key Points:

• Iran's rial has fallen to over 1 million rials for one US dollar amid rising tensions.
• Economic pressures stem from US sanctions and domestic unrest following the nuclear deal withdrawal.
• Traders in Tehran are uncertain about the currency's future value, prompting some to turn off electronic signs.

On April 5, 2025, Iran's currency, the rial, slid to a historic low of over 1,043,000 rials per US dollar as traders resumed activities following the Persian New Year (Nowruz) celebrations. Currency exchanges in Tehran faced heightened pressure, with many closing during the festivities and reopened shops witnessing a further drop in the rial's value, exceeding the worrying threshold of 1 million rials to the dollar, according to India Times and Los Angeles Times.

The depreciation can be attributed to ongoing economic turmoil exacerbated by years of international sanctions, particularly following the US's withdrawal from the Iran nuclear deal in 2018. At the time of the 2015 agreement, which was created to limit Iran's uranium enrichment, the rial was trading at approximately 32,000 rials to the dollar. As noted in reports from Al Jazeera, the return of President Trump has seen renewed sanctions and the unconstrained pursuit of crude oil markets, driving economic fears and inflation.

Market observers, including Tehran-based economic analyst Mehdi Darabi, have stated that reduced oil sales and inflation rate expectations are enabling the rial's continuous decline, causing people to hoard hard currencies and other tangible assets. “Expectations for a decrease in oil sales and more inflation have caused a higher rate for hard currencies,” Darabi explained.

The declining currency has sparked internal unrest and frustration, leading to protests over various social issues, including the contentious mandatory hijab law. Furthermore, the Iranian government faces mounting criticism, exemplified by President Masoud Pezeshkian who was compelled to fire his vice president over a luxury trip amid economic distress.

Pezeshkian stated that Iran is willing to engage in negotiations from an equal stance with the US, challenging American policies as counterproductive to fostering dialogue. "If you want negotiations, what is the point of threatening?", he emphasized in an interview, referencing ongoing US intimations of military interventions and sanctions.

As conditions continue to deteriorate, many Iranians are pushed into holding on to physical wealth or investing in cryptocurrencies, illustrating a shift towards high-risk financial strategies to safeguard against their currency's volatility.

With diplomatic efforts stalled, the situation is driving a complex intersection of internal and external pressures impacting Iran's fiscal reality and sociopolitical landscape.