November 29, 2024
The rial has plunged again, this time passing 700,000 to the dollar, which means the rial today is worth just 1/100th of one 1 percent of what it was worth before the revolution, when a dollar cost just 70 rials.
The rial passed the 700,000 mark on eight recent trading days, but has settled back a little below 700,000 for now. The record low is 710,000 rials to the dollar, set on November 6, the day it was announced that Donald Trump has been elected US president. Our accompanying chart shows the end-of-theday prices, so it only shows the rial passing the 700,000 mark on one day.
Some see the new low as a repudiation of President Pezeshkian. The currency sold for 584,000 to the dollar when he took office at the beginning of August. The rial was priced in the high 500,000s and low 600,000s for months before it suddenly started to surge in mid-October, as the country was waiting for Israel’s retaliation against the Islamic Republic for its missile barrage on Israel of October 1.
That retaliation finally came October 26. New end-of-day lows were set October 23, 24 and 25, then again on November 1 and 2, and yet again on November 7 that last low likely impelled by the election of Donald Trump as US president.
The rial also passed 700,000 on November 22 and 23. But otherwise, the rial generally stayed just under 700,000 to the dollar Before the latest spike, the previous record low for the rial was 670,000, set in mid-April when the country was awaiting Israel’s retaliation for the first Iranian missile barrage on Israel on April 1.
Both Israeli retaliations were far more modest than most in Iran had feared. And after both retaliations, the rial settled back down. It has been the norm for the rial to spike briefly, set a new record against the dollar and then quickly retreat for some months before a new fear sets off a new spike.
The retreat is usually attributed to the Central Bank injecting new dollars into the market to stop the spike. What has been a constant has been the long-term, abysmal decline in the value of the rial for the entire 45 years since the revolution.
Many countries have gone through horrifying bouts of inflation, but have then imposed financial reforms that have cured the problem and restored stability to the national currency.
Iran has gone through almost a half-century of high but not stunning inflation. The post-World War II hyperinflation of Hungary holds the record for the most extreme monthly inflation rate ever – 41.9 quadrillion percent (4.19◊1016%; 41,900,000,000,000,000%) for July 1946, amounting to prices doubling every 15.3 hours.
