Iran’s rial currency hits new record low as US prepares to announce more sanctions

Iran’s currency hit a record low Monday as Washington prepared to announce new sanctions it said would put more pressure on an economy already battered by previous sanctions and a U.S. naval blockade.

The rial dropped to 2.02 million to the U.S. dollar as trading opened on currency markets. Iran’s official Central Bank rate stood at around 1.5 million rial to the dollar, but the market rate is what most Iranians pay.

The currency had already been under pressure before the U.S. and Israel attacked Iran on Feb. 28, as Iran faced double-digit inflation and negative growth. The rial has repeatedly hit new lows as nearly six months of war have taken an even greater toll.

Iranians find daily staples increasingly unaffordable. Since the war began, rice is up some 60% and beef prices are more than 150% higher. The International Monetary Fund forecasts that gross domestic product will contract more than 5%.

Still, economic pressure has not yet translated into political pressure. Iran retains a key strategic advantage: Its attacks and threats on ships in the Strait of Hormuz have brought traffic in the vital waterway to a near halt, damaging the world economy and heaping pressure on U.S. President Donald Trump ahead of congressional elections.

The war, as a result, has devolved into a fight over who controls the strait, through which a fifth of the world’s traded oil transited before the conflict. Iran is now refusing to fully reopen it unless it can charge ships.