WANA (Mar 25) – In March 2024, at the start of the Iranian year 1403, the U.S. dollar was trading in the 60,000-toman range. However, it quickly became clear that this rate would not hold.

 

Early Stability: A Temporary Calm Before the Storm

In the initial months of 1403 (2024), the Central Bank of Iran implemented policies to stabilize the exchange rate, briefly bringing the dollar down to 57,000 tomans by July 2024. Yet, this apparent stability soon proved to be short-lived.

 

Election and Market Sentiment

On July 6, 2024, Masoud Pezeshkian was declared Iran’s president-elect. As with most political transitions, the currency market reacted cautiously. On that day, the dollar stood at 59,830 tomans, remaining below 60,000 tomans for several weeks. However, the calm did not last beyond summer.

 

Autumn: Foreign Policy Takes the Lead

The months of November and December 2024 and January 2025 underscored how foreign policy shapes Iran’s economy. In early November, Iran’s foreign minister stated that direct negotiations with the U.S. were not on the agenda. For the market, this signaled a reduced chance of economic relief. As a result, the dollar surged to 66,000 tomans.

 

As regional tensions escalated and international pressure on Iran intensified, the exchange rate climbed further—hitting 69,000 tomans in December and 76,000 tomans in January 2025.

People walk past a sign at a currency exchange as the value of the Iranian Rial drops, in Tehran, Iran, February 9, 2025. Majid Asgaripour/WANA (West Asia News Agency)

Winter Shock: The Dollar Breaks Records

By February 2025, the market faced yet another shock: the dollar surpassed 80,000 tomans. This upward trend continued into March, and for the first time in Iran’s history, the U.S. dollar hit 90,000 tomans.

 

As the Iranian calendar year 1403 (March 2024 – March 2025) came to a close, the currency market was marked by deep uncertainty. Traders had lost confidence in domestic economic policies, and the lack of progress in international relations further fueled concerns.

 

Post-Nowruz Market: Breaking the 100,000-Toman Barrier

With the Nowruz holidays of 1404 (March 2025) ending, Iran’s currency market faced an unsettling reality: the dollar had crossed 100,000 tomans, even reaching 104,000 tomans.

 

This rate signaled a historic low for Iran’s financial system. If the figure reflected real market conditions, it meant that for the first time in 18 years, Iran’s foreign currency reserves had likely fallen below $100 billion—highlighting the combined impact of inflation and capital flight.

 

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Why Did the Dollar Surge? Key Domestic and International Factors

Iran’s domestic and foreign policies played a decisive role in the dollar’s rapid rise in 1403 (2024–25). Several international factors fueled the trend:

 

Nuclear Negotiations Stalled: Despite hopeful signals mid-year, strong opposition to direct talks with the U.S. eliminated any realistic chance of economic relief.

 

Escalating Regional Tensions: Military clashes and geopolitical uncertainties in the Middle East increased investment risks in Iran.

 

New Sanctions and Banking Restrictions: The U.S. and EU imposed additional sanctions on Iranian banks, further limiting foreign currency access.

 

On the domestic front, critical issues contributed to the exchange rate crisis:

Government Budget Deficit & Liquidity Growth: Iran’s liquidity levels in 1404 (2025) are expected to exceed 10,000 trillion tomans, further driving inflation and asset speculation.

 

Energy & Production Costs: Rising electricity and gas prices—coupled with international trade restrictions—weakened Iran’s industrial competitiveness and accelerated capital outflows.

A currency dealer holds a hundred euro bill and Iranian rials as the value of the Iranian Rial drops, in Tehran, Iran, February 9, 2025. Majid Asgaripour/WANA (West Asia News Agency)

Looking Ahead: Will the Dollar Keep Rising in 1404 (2025)?

With the dollar above 100,000 tomans, the key question remains: Is the surge over, or will the exchange rate climb even higher?

 

Javad Fallahian, an Iranian economic expert, believes the outlook remains uncertain: “The future trajectory of the dollar depends on multiple factors, but one of the most crucial is the status of sanctions. Given current conditions, the probability of serious negotiations—or sanctions being lifted—remains very low.”

 

He also highlights the massive liquidity challenge, stating: “In 1404 (2025), Iran’s liquidity will likely surpass 10,000 trillion tomans. If the government fails to contain this, the exchange rate will likely continue to rise.”

 

Foreign investors typically require at least a 10% return in hard currency. However, due to sanctions, government policies, and economic instability, investment risks in Iran remain significantly higher than in other markets. As a result, industries like steel and petrochemicals—once major profit centers—now face serious challenges.

 

An Uncertain Year Ahead

Iran’s foreign exchange market appears set for continued volatility. Unless the government takes steps to reduce the budget deficit, control liquidity, and improve foreign relations, further exchange rate spikes are likely.

 

For traders and investors, closely monitoring developments will be critical. The dollar remains one of Iran’s most sensitive economic indicators, and 1404 (2025) is shaping up to be another record-breaking year—for all the wrong reasons.