Iranian Rial Hitting Historic Lows, Dividing Regime Hardliners

Iran’s currency has dropped to a new historic low again, breaking the 430,000 rial resistance point against the US dollar Wednesday, amid global political isolation and economic woes.

As the dollar hit 432,700 rials on Wednesday, the hardliners of the regime have also started rebuking the administration of President Ebrahim Raisi, who belongs to their camp. 

The rial has now lost about 80 percent of its value compared to mid-2021 and close to 50 percent since December 2021. Inflation is also skyrocketing. Food prices have jumped much faster than the overall inflation, with some items registering 100-percent increase in one year.

On Wednesday, Khabar Online, an Iranian conservative website published an article that has been growing among the country’s hardliners. Hardliners in parliament and some in military have begun harshly criticizing the presidential administration that they were praising just recently. The parliament has been pushing to get some explanations for the plummeting currency, but Raisi’s team tries to defend the status quo and their performance, mostly blaming everything on US sanctions, foreign pressures and the international economic situation. 

"The issue of the dollar in Iran is a complex issue,” the article read, noting that the same hardliners who were writing to former president Hassan Rouhani urging him not to blame sanctions for the country’s deteriorating economic situation, now blame problems on popular protests. State media seek to pretend that the reason behind the fall of rial is a foreign conspiracy to foment unrest across the country, . 

Economic analyst Albert Boghosian told Rouydad24 on Wednesday that the situation is very chaotic and no one would want to take responsibility for it. “The government does not view the lifting of the sanctions as important and necessary, and they have no concern at all to free the country from sanctions. The decision makers who are in charge have a more important priority than the people's food table. Therefore, they do not feel alarmed even when the dollar hits 500 or 600 thousand rials.”

Talks to revive the 2015 nuclear deal – or the JCPOA -- and lift most of the US sanctions have stalled since August when the last attempt by the European Union to broker a deal fell apart.

There are also reports that calls to fire the chief of Central Bank of Iran (CBI) Ali Salehabadi are increasing. He has reportedly demanded a three-month opportunity from the president. Salehabadi denied rumors on Wednesday that the government is profiting from the devaluation of the rial. Some argue the government encourages the fall of the rial to sell its dollars at much higher rates and gain more rials to pay salaries and other expenses.

While the rial is in a freefall, Raisi’s government has not even finalized the country's budget for the next Iranian year starting March 21. This can bring more chaos into the economy and government operations..

The economic upheaval comes on the backdrop of the biggest challenge against the Islamic Republic since its inception in 1979. Iran has been rocked by nationwide antigovernment protests since mid-September after a 22-year-old woman, Mahsa (Zhina) Amini, was killed in police custody. She was arrested for violating the country’s forced hijab rules. But since then, protests are coupled with strikes and have turned against the ruling regime, with many Iranians demanding a secular and democratic form of government.