The value of the Iranian national currency, the rial, fell to a record 777 thousand per dollar.
Points of attention
- Iran's national currency, the rial, has plummeted to a record low of 777 thousand per dollar amidst a severe energy crisis in the country.
- The Iranian Central Bank's efforts to stabilize the exchange rate have been challenged by the energy crisis and Western sanctions, hindering the modernization of Iran's energy system.
- The energy crisis in Iran has resulted in widespread blackouts and restrictions on gas supplies, highlighting the critical need for significant infrastructure upgrades.
- The international economic community should monitor the situation in Iran closely, as the energy crisis and currency collapse could have ripple effects on the global economy.
- Iran's status as a major oil producer and holder of significant oil reserves adds complexity to the energy crisis, emphasizing the importance of addressing energy security issues.
What is known about the record collapse of the Iranian currency
In particular, in 2015, after the signing of the nuclear deal, the value of the Iranian rial was 32 thousand per dollar.
However, on the day of the inauguration of the new president, Masoud Pezeshkian, on July 30, 2024, the exchange rate was 584 thousand to the dollar.
On the day of Donald Trump's victory in the US elections, the exchange rate was 703 thousand to the dollar.
Currently, the Iranian Central Bank is trying to stabilize the exchange rate of the national currency by injecting $220 million into the market. However, these measures only resulted in the exchange rate being 767 thousand as of Thursday morning, December 19.
What is known about the large-scale energy crisis in Iran?
The collapse of the Iranian national currency occurred after the authorities decided to close schools, universities, and government institutions amid a rapidly worsening energy crisis.
It has suddenly become much colder in Iran, causing the power system to be unable to withstand the loads.
The country has introduced widespread power outages and restricted gas supplies.
The country's energy system needs a major modernization that is virtually impossible to implement due to Western sanctions. This summer, Iran experienced a series of blackouts when the power system could not cope with the loads during a period of abnormal heat.
According to the U.S. Energy Information Administration, in 2022, Iran was the world's seventh-largest crude oil producer and had the third-largest proven reserves after Venezuela and Saudi Arabia.
