Iran's Currency Strengthening Amid Hopes For A Nuclear Deal

Iran’s battered currency has risen around 10 percent since its lows in early December when the market was gripped by pessimism over a possible nuclear deal.

The rial rose to 275,000 against the US dollar in Tehran’s unofficial currency exchange market on Friday, after falling to 310,000 in the closing weeks of 2021.

Nuclear talks that started last April in Vienna have yet to result in an agreement, but some progress has been reported. Negotiators have returned to their capitals in what diplomats have said is the decisive stage of making tough decisions.

Iran’s currency began to fall in late 2017 as it became apparent that former US president Donald Trump wanted to withdraw from the 2015 nuclear agreement with Iran and impose sanctions. It continued to lose value as Washington began imposing sanctions in mid-2018 and so far, the rial has fallen eightfold against major currencies.

As the cash-strapped government printed more money the currency became weaker and annual inflation reached to more than 40 percent.

Although there is no definitive outcome in the nuclear talks, the rial began rising in January. One reason could be Iran’s higher oil exports despite US sanctions. By all indications, Tehran has been shipping more crude in the past months, although it is not clear how much foreign currency returns to its coffers.