The Iranian Rial dropped nearly 10% between Sunday and Tuesday, dealing another huge blow to the Iranian economy; US sanctions are seen as the primary source of Iran’s downward economic trend, though COVID-19 is also a factor.
Iran’s economic downward trend took another hit at the beginning of the week when the rial dropped to a value of 166,000 rials to the dollar on Monday. This is an increase of 10,000 rials to the dollar from Sunday, just 24 hours earlier, which is considered to be very alarming. To put this in perspective, the rial was valued at 32,000 per US dollar in 2015, prior to the Iran Nuclear Deal, sanctions, and COVID-19.
One of the primary reasons for the Islamic republic’ s economic turmoil is found in the devastating sanctions they’re receiving from the United States. The US has implemented and restored sanctions over the last few years after withdrawing from the Joint Comprehensive Plan of Action (JCPOA), or Iran Nuclear Deal; a deal that did nothing but further enable the world’s number one sponsor of terror.
These sanctions have limited Iran’s crude oil exports in an unprecedented manner, dropping their barrel per day (bpd) export to less than 500,000. Prior to the sanctions, this number was 2,000,000.
In addition to the sanctions, COVID-19 has also played a role in the value of the rial.
The drop in the value of the Iranian currency is following in the footsteps of several other countries in the region such as Lebanon, Turkey, and Syria. Well over 50% of Lebanon is in poverty with 75% needing some sort of aid. The Turkish lira is continuing down a destructive path and the Syrian pound is going with it.
As these countries are caught up in civil war and unrest, government protests, and COVID-19, the immediate outlook remains very concerning economically.