Iranian Rial Collapse: How Sanctions, War and Inflation Broke the Currency

A rate tracker shows about 2.73 million rials per dollar Protests, war and free fall

What it shows: The Alanchand open-market tracker listed the dollar at about 2,734,000 rials on 31 October 2026, down 21,000 rials (0.76%) on the day. That is roughly 273,400 tomans.

How far to trust it: This is a tracker reading, not a report from a news agency, and street quotes differ by tracker and by hour. We could not corroborate it with a second source, so the last verified record in this article remains the 2.5 million-plus figure reported on 29 September.

Traders in Tehran exchange more than 2.5 million rials for one dollar Protests, war and free fall

What happened: On Tuesday 29 September 2026, traders in Tehran were exchanging more than 2.5 million rials for one US dollar, a new record low, according to the Associated Press. The previous record had been about 2.2 million rials on 2 September, 27 days earlier. Before the war began in February, the open-market rate was about 1.7 million.

Which date?: Some summaries place this record in “October”. The AP-based reports and Democracy Now date it to 29 and 30 September. It is also an open-market rate, not the official rate used for every government transaction.

Why: The reports tie the slide to economic damage from the war, restrictions on Iranian oil exports and new sanctions, on top of years of inflation.

The dollar breaks 2.1 million rials; central bank promises $2 billion Protests, war and free fall

What happened: On 2 September 2026 Euronews reported that the dollar had broken 2.1 million rials on Tehran’s free market, with the euro at a record 2.55 million. Other outlets that day put the dollar at about 2.2 million, so the figure depends on the tracker and the hour. The headline of Euronews’s own web address says 2.2 million.

The intervention: Central Bank of Iran governor Abdolnaser Hemmati said the bank was ready to inject $2 billion into the foreign-exchange market. A report the same day put the official central-bank rate at about 1.5 million rials, a gap of roughly 40-45% with the street.

The “60%” claim: Euronews said the rial had lost around 60% of its value since March, when the dollar traded at about 1.35 million rials. From 1.35 million to 2.1-2.2 million, the dollar’s price rose about 56-63%; the rial’s purchasing power fell about 36-39%. See the explainer below.

Inflation near 84-89% as war damage and shipping limits bite Protests, war and free fall

What the UK briefing said: A House of Commons Library briefing, published 27 August 2026, reported that the rial had reached a record low in August and that year-on-year inflation had reached 84%. We could not open the briefing itself, so we attribute that figure to it.

Other measures: Euronews reported two official series for the 22 May-21 June month: the Statistical Centre of Iran put year-on-year inflation at 88.6% and the Central Bank at 83.1%. The two differ by methodology. The IMF projected average inflation of about 68.9% for 2026 and a contraction of about 6.1% in GDP.

Careful with the word: “Year-on-year” compares one month with the same month a year earlier. It is not an annual average, and it is not a verified November figure.

A memorandum steadies the rial for a few weeks, then the ceasefire collapses Protests, war and free fall

What happened: The presidents of the United States and Iran signed the Islamabad Memorandum on 17 June 2026, a memorandum of understanding that set a 60-day period to negotiate final terms. Pakistan had mediated the earlier ceasefire and the talks. Sources describing the oil terms are thinner, and we have not verified that Iranian oil exports actually resumed.

The rial: Euronews reported that the rial recovered to about 1.53 million per dollar after the memorandum, from a record near 1.9 million. By its 30 June report, renewed tension had pushed it back toward 1.7 million.

The collapse: According to Wikipedia’s timeline, the ceasefire collapsed on 8 July after attacks by both sides, and fighting resumed. The diplomatic opening did not restore lasting stability.

Rial hits 1.8 million as a shaky ceasefire holds Protests, war and free fall

What happened: On Wednesday 29 April 2026 the rial hit a record low of 1.8 million to the dollar while a shaky ceasefire with the United States and Israel was in place. AP reported that the rial had stayed relatively stable for weeks during the war, partly because there was little trading or importing, then weakened from about 1.4 million to 1.6 million in less than a week. Currency-tracking websites showed rates between 1.76 and 1.81 million.

The blockade: The US blockade of Iranian ports, AP reported, had cut into a key source of government revenue and hard currency by stopping or intercepting oil shipments.

Inflation: The Central Bank figure reported by Business Recorder put year-on-year inflation for the Iranian month from 20 March to 20 April at 65.8%.

Ceasefire, failed talks and a blockade of Iranian ports Protests, war and free fall

What happened: A two-week US-Iran ceasefire, mediated by Pakistan, was agreed on 7-8 April. Talks in Islamabad led by US Vice President JD Vance failed on 12 April. The next day, 13 April, US forces began a blockade of ships entering or leaving Iranian ports, according to CENTCOM.

Why it matters here: The blockade is a separate step from the 28 February strikes. It was imposed about six weeks later and targeted the oil and import flows on which the foreign-currency supply depends. Euronews reported the rial at about 1.63 million after a 7 April threat of further strikes, and about 1.525 million after the ceasefire.

US and Israeli strikes begin the war Protests, war and free fall

What happened: The United States and Israel began strikes on Iran on 28 February 2026. We use that date, which AP and Euronews both give. A passage in the UK Commons Library briefing refers to 29 February 2026, which was not a calendar date; we treat it as a typing error.

The rial: Euronews put the rate at about 1.72 million per dollar after the strikes began, and AP gave about 1.7 million before the war. During the early conflict it temporarily eased to about 1.46 million as reduced activity lowered demand for dollars. Different trackers and a changing market make single numbers fragile.

The shock: The war added risks to oil exports, shipping through the Strait of Hormuz, trade and investment, and to the foreign-currency earnings that support the rial.

Rial falls to 1.5 million per dollar Protests, war and free fall

What happened: On Tuesday 27 January 2026 exchange shops in Tehran offered a record 1,500,000 rials per dollar, according to Iranian currency-tracking websites cited by Al Jazeera.

The protests: Demonstrations began in the capital on 28 December 2025 and spread nationwide. About a month before the latest drop, shopkeepers in Tehran’s Grand Bazaar had shut their stores to protest the rial’s decline, high inflation and the end of some food and fuel subsidies. Demonstrators later raised wider political demands, so the exchange rate was a trigger, not the only grievance.

Protests begin after months of rising prices Protests, war and free fall

The backdrop: Euronews reported year-on-year inflation of 52.6% in December 2025, rising to about 68% by February 2026. Shopkeepers and traders were hit hardest by the fast-changing exchange rate, which made it hard to price goods, replace imported stock and plan.

Careful attribution: The protests spread beyond the capital and took on political demands. We do not attribute every demonstration to the exchange rate alone.

Maximum pressure returns; the dollar passes 94,000 tomans Protests, war and free fall

What happened: On 4 February 2025 the White House restored a “maximum pressure” policy toward Iran, with the stated aim of driving Iranian oil exports toward zero. Sanctions and uncertainty over nuclear diplomacy added pressure to the foreign-exchange market.

The rate: An academic study of Iran’s repeated currency shocks records the free-market dollar at 93,500 tomans on 28 February and 94,500 on 2 March 2025. In rials, that is about 935,000 to 945,000.

A new subsidised rate of 285,000 rials Sanctions era

What happened: Six months after ending the 42,000-rial policy, the Central Bank introduced a new fixed rate of 285,000 rials per dollar for essential imports in December 2022, the World Bank reports.

The catch: The World Bank notes that the policy of defending a fixed rate by direct intervention widened the gap with the parallel market. A subsidised rate cannot guarantee that every importer can actually obtain dollars at that price.

Women, Life, Freedom protests coincide with a weaker rial Sanctions era

What happened: The death of Mahsa Amini in September 2022 after her detention by the morality police set off nationwide protests under the slogan Women, Life, Freedom.

The rate: The study records the free-market dollar rising from slightly above 33,000 tomans in September (about 330,000 rials) to around 50,000 tomans (about 500,000 rials) by the end of 2022. The protests were not the sole cause; sanctions, inflation and the dollar shortage were already at work.

The 42,000-rial preferential rate is scrapped Sanctions era

What happened: In May 2022 the government eliminated the subsidised exchange rate, set at 42,000 rials per dollar after the 2018 sanctions, for essential imports. Limited access to reserves abroad, large demand and misallocation of funds had undermined it, the World Bank says.

The cushion: Under a cash-transfer scheme introduced in June 2022, people in the first three income deciles received 4 million rials a month and those in the fourth to ninth deciles 3 million, reaching about 78 million of Iran’s 85 million people.

The US leaves the nuclear deal and the rial breaks Sanctions era

What happened: The United States withdrew from the 2015 nuclear deal (JCPOA) on 8 May 2018. The Congressional Research Service says the first tranche of sanctions returned on 7 August 2018 after a 90-day wind-down, and the rest, including measures on oil and banking, on 5 November.

The rate: CRS records the unofficial rate at about 95,000 rials per dollar in August 2018 and nearly 150,000 by 5 November, easing to about 100,000 at the start of 2019. The Vahabi study has the dollar peaking at 18,500 tomans (185,000 rials) in October 2018 and passing 30,000 tomans (300,000 rials) in 2020. The sources differ on the exact peak.

The response: After the reimposition the government established a subsidised rate of 42,000 rials per dollar for essential imports. The withdrawal was a major trigger for the fall, not its only cause.

Nuclear diplomacy steadies the currency Sanctions era

What happened: The election of Hassan Rouhani and the 2013 interim nuclear agreement (the Joint Plan of Action) caused the rial to stabilise at about 35,000 to the dollar, the Congressional Research Service says. The final JCPOA, reached in July 2015, raised hopes of more oil exports, investment and access to international finance.

The limit: Stability depended on continued international cooperation. It was a pause after the 2012 collapse, not a return to earlier rates.

Oil and banking sanctions halve the rial’s value Sanctions era

What happened: The United States and European Union tightened pressure over Iran’s nuclear programme, restricting oil purchases and international banking. A US executive order also blocked foreign banks from transactions in rials.

The rate: The Congressional Research Service says sanctions caused the value of the rial on unofficial markets to decline about 56% from January 2012 to January 2014.

Another sharp depreciation: 2,635 to 4,036 rials per dollar Revolution to the 1990s

The numbers: The Cambridge study Recurrent exchange rate shocks and Anfal in Iran records the unofficial rate rising about 46% in 1994, from 1,806 to 2,635 rials per dollar, and a further 53% in 1995, to 4,036 rials. These are rials, not tomans; confusing the two is a common error in quoting this period.

Why it matters: The episode shows that currency instability did not begin with the 2010s sanctions. High inflation, pressure on foreign-exchange availability and policy uncertainty were enough.

Governments try to close the gap between official and market rates Revolution to the 1990s

What happened: In 1991 the Central Bank raised the official rate from 67.8 to 1,420.2 rials per dollar to narrow the gap with the unofficial rate. Attempts to unify the rates in the early 1990s then failed, the Vahabi study says, as fiscal pressure and continued preferential access to foreign currency undermined the system. Other accounts date a unification attempt to March 1993; we have not reconciled the dates.

The lesson: An official rate is hard to hold when the state cannot consistently supply dollars at the promised price.

Revolution, then eight years of war Revolution to the 1990s

The first shock: Political upheaval and capital flight followed the 1979 revolution. The Vahabi study has the open-market dollar rising from about 7 to 27 tomans (roughly 70 to 270 rials) between 1979 and 1981, though the paper words the size of that move inconsistently, so treat it as indicative.

The war: The Iran-Iraq War began in September 1980 and lasted eight years. It strained public finances, industry and oil facilities, and Iran ran a complicated foreign-exchange system with different rates for different transactions.