The fall marks another milestone in a prolonged erosion of purchasing power for households already struggling with steep increases in food, housing and other essential costs. The dollar had been trading at about 1.86 million rials at the beginning of the previous week and approached 1.98 million on Sunday before breaking through two million as markets opened on Monday.
Iran operates multiple exchange rates, making the open-market quotation markedly different from the rate used in parts of the formal economy. The Central Bank of the Islamic Republic of Iran maintains an official rate of roughly 1.5 million rials to the dollar, but businesses and households seeking foreign currency commonly face substantially higher prices outside controlled channels.
The renewed slide comes as Washington prepares another round of measures designed to restrict Tehran’s access to international finance, oil revenues and commercial networks. US authorities have progressively widened measures against shipping companies, financial intermediaries, digital-asset platforms and entities accused of helping Iran move money or evade existing restrictions.
Pressure on those networks has intensified during the northern hemisphere summer. Measures announced in July targeted dozens of people, companies and vessels linked to Iranian shipping and sanctions-evasion activities, while actions earlier this month focused on international financial networks used to move hundreds of millions of dollars.
The currency shock is feeding directly into inflation. Consumer-price pressures have accelerated sharply, while the cost of food has risen much faster than overall prices. July inflation was estimated at about 66%, with food-price increases exceeding 100% on an annual basis, adding to strains on salaries and savings denominated in rials.
The International Monetary Fund projects average consumer-price inflation of 68.9% for 2026 and expects Iran’s economy to contract by 5.4% this year. The Fund’s outlook reflects disruption to trade, investment and production alongside persistent financial restrictions, although oil exports earlier in the year provided some support to activity.
The depreciation creates an additional inflationary channel because Iran remains dependent on imported machinery, intermediate goods, medicines and agricultural inputs. A weaker rial raises replacement costs for businesses and encourages traders to price goods against expected future exchange rates rather than current production costs.
Demand for dollars and other hard currencies typically rises during periods of political uncertainty as households and companies seek protection from further losses in the rial. Gold and property have also traditionally served as stores of value, but the scale of the latest currency decline has increased the appeal of immediately convertible foreign currencies for those able to obtain them.
The latest movement also highlights the limits of administrative efforts to stabilise the exchange market. Authorities have periodically tightened controls on currency trading, expanded official exchange mechanisms and attempted to channel export earnings back into the banking system. Such measures can narrow gaps temporarily but have struggled to reverse a broader decline driven by inflation, sanctions and expectations of further economic disruption.
Iran’s external commercial environment has simultaneously become more difficult. Regional trade and payment channels that previously helped companies bypass restrictions have come under greater scrutiny, while Tehran’s access to foreign-exchange earnings remains heavily dependent on energy exports and intermediaries willing to handle transactions carrying sanctions risks.
The rial’s weakness has become an increasingly visible political issue because exchange-rate moves rapidly affect household budgets. Wage increases are being eroded by inflation, while businesses face difficulty planning inventories, setting prices or financing imports when the currency can move significantly within days.
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