Iran’s rial currency hits new record low as US prepares to announce more sanctions

Tehran, Iran — Iran’s currency fell to a new low on Monday as the United States prepared to announce additional sanctions. The rial dropped to 2.02 cardinal to the U.S. dollar when trading opened on currency markets. The Central Bank’s official rate stood at about 1.5 cardinal rial to the dollar, but the market rate is what most Iranians actually pay. The currency had already been under pressure before the U.S. and Israel attacked Iran on Feb. 28, a period marked by double‑digit inflation and contracting growth. Since then it has repeatedly hit fresh lows, with roughly six months of warfare taking an even heavier toll. Iranians find everyday staples increasingly unaffordable. Since the conflict began, the price of basic food items has risen by more than 60%, while beef prices are over 150% higher. The International Monetary Fund projects that GDP will contract by more than 5%. Still, economic strain has not yet translated into political pressure. Iran retains a key strategic advantage: its attacks and threats against vessels in the Strait of Hormuz have brought traffic in that vital waterway to a near halt, damaging global shipping and adding pressure on U.S. President Donald Trump ahead of legislative elections. As a result, the war has devolved into a struggle over who controls the strait, through which a fifth of the world’s traded oil previously moved. Iran says it will not fully reopen the passage unless it can levy fees on passing ships. Iran and Oman, which lies on the opposite side of the strait, are reportedly in the final stages of agreeing on a joint management plan for the waterway. Oman’s foreign minister is scheduled to visit Iran on Tuesday. In an effort to break the impasse, the Trump administration said it would announce even tougher sanctions on Monday, including secondary penalties against countries that continue to do business with Iran. Ahead of the announcement, Trump posted on social media: “IRAN IS COMPLETELY COLLAPSING!!!” “President Trump decimated Iran’s economy to a point where the rial has never been weaker and inflation has seldom been higher,” U.S. Treasury Secretary Scott Bessent wrote in a Sunday opinion piece for the Financial Times. “The regime’s last refuge now lies in the self‑deception of fearful nations that still believe accommodating aggression can secure a durable peace.” Already last week, the United Arab Emirates announced it was suspending all trade with Iran. The UAE has long been one of Iran’s top trading partners and its biggest source of imports. Iranian Foreign Ministry spokesperson Esmail Baghaei told reporters in Tehran on Monday: “any escalation of this concern will undoubtedly bring about consequences.” He added: “Our hands are not tied.” Pakistan, which helped broker a 60‑day cease‑fire in June, sent a high‑level delegation to Iran on Monday to discuss ending the war, according to officials. In downtown Tehran, 73‑year‑old Sadegh Mahmoudi said he saw little hope for a resolution. He joined a group of about a dozen people buying U.S. dollars with his remaining savings to hedge against further declines. “There is no hope for a deal and peace,” he said. Rising reported from Dubai, United Arab Emirates. Associated Press writer Munir Ahmed in Islamabad contributed.