Iran’s currency has resumed its historic decline, sliding 7% on Monday.
Amid long-term internal problems and expanding US sanctions, the rial has lost 70% of its value this year from an already historically-low 45,000:1 in January.
After another sharp fall earlier this month, the currency held for more than a week at 149,500:1 vs. the American dollar, but on Monday it dropped to 160,000:1.
Still responding to Saturday’s gun attack on a military parade in southwest Iran which killed 29 people and wounded more than 60, Iranian leaders offered no comment on the rial on Monday.
Instead, State media declared good news, with the European Union pledging to establish a “special purpose vehicle” to pay for Iran’s exports amid US sanctions, including comprehensive measures taking effect on November 5.
The EU’s foreign policy chief Federica Mogherini and Iranian Foreign Minister Mohammad Javad Zarif announced the step after a meeting in New York between the remaining parties in the 2015 nuclear deal (Iran, France, UK, Germany, Russia, and China).
After US withdrawal from the agreement in May, the Rouhani Government has tried to establish trade and investment links with European companies. The EU has supported the effort, but it has been limited by the threat of US punishment on any firm with American links continuing to do business with Tehran. As a result, many large European firms have suspended or drawn down their involvement in the Islamic Republic.
Iran is facing serious problems with production, investment, and employment, while the rial’s devaluation has led to a resurgence of inflation. Oil exports have fallen 30% since April, with a further cut likely when the full US sanctions are imposed in six weeks’ time.
The Supreme Leader has told Iranians not to be pessimistic, despite no suggestions for his “Resistance Economy”, while President Hassan Rouhani — under pressure from hardliners and with rumblings inside his ranks — has tried to turn the crisis into a “war against the aggressors of history”.