Iranian Currency Plunges To Record Low As Economy Remains Under Strain Due To The War
Iran’s currency plunged to a record low on Wednesday as economic strain from its war with the U.S. and Israel continues.
Concretely, the Iranian rial hit 1.8 million per U.S. dollar, marking its third consecutive decline.
ABC News detailed that the currency had remained largely stable in the early weeks of the war because there was little trading or imports. However, that changed this week.
The rial’s depreciation was one of the main causes for country-wide protests earlier this year, which led to substantial repression and the killing of thousands. Back then, the rial slid from 1.4 million to 1.6 million per U.S. dollar in less than a week, fueling fears about further inflation.
In this context, another report noted that millions of Iranians are now closer to unemployment and poverty as a result of the economic impact of the war.
An extensive CNN report detailed layoffs and unpaid leave across refineries, textiles, trucking, aviation, and journalism. Iran’s deputy work and social security minister, Gholamhossein Mohammadi, said the war has directly cost about 1 million jobs.
Iranian publication Etemad Online estimated another 1 million people have been pushed out of work through spillover effects.
The United Nations Development Programme warned that military escalation is disrupting livelihoods, essential services, and local economic activity across the country. Its analysis said up to 4.1 million more people could fall into poverty, and the country could lose up to one and a half years of human development progress.
“Each day the crisis continues adds pressure on people’s current livelihoods and their futures,” said Beate Trankmann, UNDP deputy regional director for Asia and the Pacific.
Hadi Kahalzadeh, a welfare economist and nonresident fellow at the Quincy Institute, estimated to CNN that 10 million to 12 million jobs, roughly half of Iran’s workforce, are now at risk. He wrote that many firms have suspended operations under “the combined pressure of war, inflation, recession, and collapsing demand.”
Inflation has made job losses even harsher. Kahalzadeh said Iran’s point-to-point inflation reached 72% in March, while CNN reported that prices for essentials have risen even faster. Low-income households spend about 45% of their income on food, according to UNDP, leaving them especially exposed to shortages and price spikes.
The U.S. continues to blockade Iranian ports in the meantime, preventing it from exporting oil. Intelligence firm Kpler said that, as a result, the country has between 12 and 22 days worth of storage left. It went on to detail that the country is losing between $200 and $250 million for every day the blockade continues.
The report also noted that it usually takes about two months for the country’s oil to reach its main buyer, China, with buyers having a similar period to make payments. That means the economic pain of the blockade might not be felt for a few more weeks.
