US Dollar Hits Record High Against Iranian Rial

On Saturday, the U.S. dollar soared to a new high in Tehran’s free market, surpassing 1.94 million rials. This surge comes amid escalating military and political tensions, which are contributing to the Iranian currency’s ongoing decline and raising fears of rising inflation.

The dollar reached 1,941,000 rials, marking an increase of 32,000 rials (1.67%) from the unofficial closing price the previous day. Meanwhile, the euro also increased, trading at 2.22 million rials—up 36,000 rials (1.64%) since the last unofficial close on Friday.

Since the beginning of the year, the Iranian rial has lost approximately 43.7% of its value against the dollar, which was around 1.35 million rials then. The rial’s decline accelerated after airstrikes by the U.S. and Israel on Iran on February 28, causing the dollar to reach 1.72 million rials.

Initially, the conflict led to a temporary decrease in demand for foreign currency, and the dollar fell to about 1.46 million rials. However, on April 7, after threats of additional airstrikes from Donald Trump, the dollar rebounded to 1.63 million rials before dropping again to roughly 1.525 million rials following a ceasefire announcement.

The Iranian government estimates wartime damages at $300 billion, putting more pressure on the foreign exchange market, and causing the dollar to rise again to nearly 1.9 million rials. A subsequent “memorandum of understanding” between Tehran and Washington briefly restored some stability, lowering the exchange rate back to 1.53 million rials. Yet, renewed political tensions soon drove the dollar back up to around 1.7 million rials.

Additionally, a newly imposed naval blockade and U.S. airstrikes targeting southern Iran have intensified pressure on the rial. Washington claims these actions aim to diminish Iran’s military capabilities and safeguard maritime transit through the Strait of Hormuz. This escalation raises concerns over further currency depreciation and a spike in inflation.

Economic conditions in Iran show significant price pressures. Recent official figures indicate that annual consumer price inflation surged to 52.6% in December 2025, climbing to about 68% by February 2026, and ultimately reaching 88.6% last month. This marks the highest inflation rate Iran has seen since World War II.

The combination of persistent high inflation and rapid currency devaluation is eroding the purchasing power of the rial. Consequently, the rising cost of imports fuels inflation expectations, creating a vicious cycle that further drives up prices and places additional strain on households and the overall economic stability of the country.