Sanctions Send Iran’s Rial Tumbling – Dollar Skyrockets to 1.1 Million on the Black Market (قیمت دلار)

Rial Plummets: In late 2025 one US dollar trades for roughly IRR 1,080,000–1,130,000 on Iran’s open “free market,” a historic low ^[1] ^[2]. Officially, the Central Bank’s rate was only about IRR 545,700 per USD in April 2025 ^[3] (having been allowed to float up from the old IRR 42,000 peg).
Dual Exchange System: Iran maintains multiple rates. A subsidized “essential imports” rate (~IRR 280,000–370,000 per USD) is reserved for food/medicine (set by ministries and the CBI) ^[4] ^[5]. A managed Electronic Trading System (ETS) rate (IRR 600,000–700,000) handles bank and export currency flows ^[6] ^[7]. All other USD trades occur at the open-market rate – which Iranians refer to simply as “the dollar rate” – far higher than any official rate.
Street vs Digital: Ordinary Iranians buy and sell dollars mainly through licensed moneychangers (‌‌sarrafi shops) and informal hawala networks ^[8] ^[9]. Many also turn to cryptocurrencies: domestic crypto platforms (e.g. Nobitex) handle hundreds of millions, as people stash savings in Bitcoin or stablecoins when the rial dives ^[10] ^[11]. Sanctions have pushed banks out of global markets, so formal SWIFT transfers are nearly impossible and cash channels prevail.
CBI Intervention: The Central Bank tries to manage the turmoil via auctions and policy tools. It relaunched the ETS in 2022 to absorb exporters’ hard currency, and even devalued the old official peg to ~IRR 370,000 in 2024 ^[12]. Recently CBI Gov. Farzin assured citizens reserves are “secure” and introduced measures (gold bonds, currency pre-sales) to stabilize the market ^[13] ^[14]. Despite this, the rial continues to weaken under economic strains.
Sanctions & Shadows: U.S./UN sanctions have choked Iran’s oil revenues and banking. Sanctions “snapback” fears in late-2025 sent the rial to new lows (over IRR 1.1M) on the black market ^[15] ^[16]. A vast “shadow banking” network of sanctioned exchange houses and front firms (e.g. in UAE/HK) now manages most foreign trade flows, as detailed by U.S. Treasury reports ^[17] ^[18]. These networks allow regime insiders to move dollars abroad, fueling corruption but keeping some trade alive.
Global Parallels: Like Iran, countries with tight FX controls see parallel markets. Venezuela’s bolívar black-market rate far undercuts the official peg (with gaps often over 50%) ^[19]. Argentina’s “blue dollar” similarly trades much weaker than the official peso rate (e.g. ARS 1,520/USD vs ~ARS 1,475 official in Sept 2025 ^[20]). Lebanon’s multiple USD rates and black-market liquidity crunch mirror Iran’s currency woes. In all these cases, strict controls and low official supplies push ordinary people to the freer, weaker market rate.

Official vs. Open-Market Rates

Iran’s official rate (set by the Central Bank for government transactions) has been gradually devalued but remains far below the free-market price. After years of a fixed IRR 42,000/USD “budget rate,” by early 2025 the CBI’s end-of-period rate was about IRR 545,700/USD ^[21] (still heavily managed). Meanwhile, Iran introduced an Electronic Trading System (ETS) where banks and exporters trade dollars in a semi-controlled manner. The ETS rate in 2025 has been around IRR 600,000–700,000 ^[22] ^[23] (this roughly matches what exporters and importers see in practice for non-subsidized goods).

By contrast, street (parallel) rates – widely quoted by currency monitors – are dramatically higher. In early summer 2025 the black-market dollar was about IRR 929,000/USD ^[24], and it broke past IRR 1,000,000 by September ^[25] ^[26]. When UN/US sanctions loomed in late Sept 2025, some trackers reported ~IRR 1,120,000 ^[27] and an Intellinews survey found ~IRR 1,085,000 ^[28]. These open-market rates reflect real demand – investors, importers and consumers all seek hard currency. They are heavily influenced by inflation expectations, geopolitical risk and liquidity in the economy ^[29] ^[30].

Crucially, most Iranians only have access to the parallel rate. The subsidized import rate (now ~IRR 285,000/USD ^[31]) is limited to government-approved importers of essential goods. After years of abuse of the old 48,000 rial rate, that lowest tier has essentially vanished. In effect, everyday exchange and pricing happen at the “free market” level, even if officially some transactions occur at lower mandates. As IranIntl notes, “ordinary people…generally only have access to the open market” for currency ^[32].

How Iranians Buy and Sell Dollars

With international banking cut off, Iranians rely on local dealers and informal networks to exchange currency:

Money Changers (Sarrafis) and Hawala: Licensed forex shops line Tehran’s bazaars and operate nationwide. They quote the going rate (often from websites like Bonbast or AlanChand) and trade cash or hawala transfers. Hawala – a trust-based transfer system outside formal banks – moves funds through regional brokers. (Al Jazeera notes that Iran’s CBI-run NIMA system itself uses hawala, since many banks can’t directly transact abroad ^[33].) These dealers buy dollars from exporters or black-market sources and sell to importers or savers. They often operate both in cash and via phone networks.
Digital Platforms and Crypto: Despite sanctions, Iran has a booming crypto scene. The exchange Nobitex processed over 87% of Iran’s crypto trade in 2025 ^[34]. Many Iranians convert rial into stablecoins (USDT, etc.) via peer-to-peer crypto exchanges as an alternative dollar hedge. TRM Labs reports that crypto remains a “vital channel for capital flight,” enabling money to leave Iran even under sanctions ^[35]. These platforms occasionally cooperate with hawala: for example, a user might buy USDT on Nobitex, transfer it abroad, and redeem dollars via international exchangers. The June 2025 hack of Nobitex (losing ~$90M) and large-scale freezes of Iranian crypto wallets (by Tether) show how entwined digital and black markets have become ^[36] ^[37].
Banks (Limited): For sanctioned Iran, formal banking to the world is minimal. State banks can still service some humanitarian imports and oil clients via special accounts or barter. The ETS platform (run by the Iran Center for Currency and Gold Exchange, a CBI-affiliated bourse) is the closest thing to a regulated market – but it’s only open to licensed banks and exchange offices, not ordinary citizens ^[38]. The ETS now covers what NIMA used to do: exporters deposit dollars and buy rials at rates close to market. In practice, few businesses can use official channels because of paperwork or politicized allocation. Many Iranian importers simply end up buying dollars on the street or through unofficial agents.

In short, dollar access is largely informal. A typical Iranian household protects savings by buying dollars or gold in cash through a sarrafi. Some tech-savvy people also use encrypted messaging apps to contact hawaladars who can physically courier cash to Dubai/Hong Kong hubs (common expatriate networks). Even government oil proceeds end up partly in underground exchanges to get usable currency. With only limited official outlets, Iranians have built a parallel forex ecosystem.

Central Bank and Forex Policy

Iran’s Central Bank (CBI) oversees but cannot fully control this complex FX landscape. Key points:

Official Rates and Reforms: In 2022–2024 Tehran officially moved away from the old 42k peg. By mid-2024 the CBI revalued the subsidized rate to IRR 370,000/USD ^[39], and then fully scrapped the fixed “Jahangiri” currency (it’s now about 285,000 for essentials) ^[40]. The stated goal is to reduce black-market arbitrage: a higher official rate means less gap. In practice, the main official tool is the ETS: a semi-official FX exchange where rates float under CBI oversight ^[41] ^[42]. The CBI occasionally injects dollars (from oil sales or reserves) into this market to lean on the rial, or sells small amounts to licensed buyers at the official rate.
Interventions and Controls: When the rial begins to free-fall, authorities sometimes crack down on “illicit” dealers. For example, ahead of the 2025 nuclear talks the government moved against publicizing rapid FX moves (some media outlets were censored) ^[43]. The CBI has also announced chain-financing, gold bonds and pre-sold FX contracts for importers to try to absorb demand ^[44]. Still, analysts note the CBI mainly defends the subsidized rate, not the market rate ^[45], because it would deplete reserves otherwise.
Limited Tools: Iran cannot rely on Western financial channels. Credit cards and SWIFT wires are blocked. Even trading partners are wary: buyers of Iranian oil must use non-USD settlement (e.g. yuan or rupee accounts). This scarcity of legitimate foreign currency is often cited by economists as the root of the crisis ^[46] ^[47]. CBI’s statements focus on “curb[ing] inflation and maintain[ing] stability” ^[48], but many experts say without easing sanctions or major reforms, there is little it can do to shore up confidence.

Impact of Sanctions and Economic Effects

Sanctions have been decisive. Throughout 2025 the looming “snapback” of UN sanctions led to repeated rial crashes. Reuters and other outlets documented that each geopolitical shock – new U.S. measures or regional conflict – triggered sudden spikes in the black-market dollar ^[49] ^[50]. Sanctions restrictions have cut Iran’s oil exports (now ~1.2 mbpd, down from 2.5 pre-sanctions) ^[51] and frozen many central bank assets abroad. The dollar shortage is chronic: “There is demand for dollars, but it is not being supplied sufficiently,” notes economist Omar Ahmed ^[52].

The consequences for Iran’s economy are severe:

Inflation and Cost of Living: With imports priced off black-market dollars, prices for imported goods surge. Official CPI inflation is ~35%, but independent analysts put it near 50% ^[53]. This fuels a vicious cycle: higher inflation breeds more demand for USD as a store of value, further weakening the rial. Food costs doubled in 18 months ^[54]. Many Iranians describe a debt-deflation spiral, where salaries are paid in depreciating rials but obligations (like rent or tuition) are effectively in hard currency.
Social Strain: Currency crashes erode real incomes. Business owners say access to foreign raw materials is “a critical obstacle,” threatening production ^[55]. Protests over living costs have flared (e.g. gasoline riots in 2019). Iranian commentators warn that another sanctions wave could push inflation to 60–90% ^[56]. Literacy and health budgets suffer as more Rial are needed for imports. One economy minister candidly said the situation is a crisis despite optimism at the start of the year ^[57].
Economic Policy Debate: Iranian economists urge reforms beyond currency tweaks. For example, Jamshid Assadi argued that simply cutting zeros won’t help without fixing fiscal deficits and central bank independence ^[58]. Others note that maintaining multiple FX rates creates rampant corruption, as importers with subsidy access can sell dollars at a profit ^[59] ^[60]. Even the government acknowledges trouble: the proposed 2025 budget reportedly plans much larger subsidies to cover higher official-dollar costs ^[61].

Comparison: Iran vs. Other Controlled Economies

Iran’s unofficial forex market is part of a pattern seen in other countries under tight controls:

Venezuela: Caracas has long enforced multiple official rates, pushing everyone to the “black market” bolívar. Bloomberg and analysts report that new U.S. sanctions (oil, Chevron) in 2025 widened Venezuela’s gap – with the informal rate over 50% weaker than any official rate ^[62]. Venezuelans now operate in a semi-dollarized economy where prices track the free-market rate even if an official “simadi” or auction rate exists. Similarly, many Venezuelan businesses must use informal dollar channels to import food/medicine.
Argentina: Before recent reforms, Argentina had a notorious “blue dollar.” In Sept 2025, despite new policies, Reuters noted the blue rate hit ARS 1,520 per USD – a record – while the official band was ~ARS 1,475 ^[63]. That gap incentivizes otherwise illicit dollar purchases. (By comparison, Iran’s black-market rial was ~IRR 1,080,000 at that time – orders of magnitude weaker but conceptually similar.) Like Iran, these economies suffer when citizens can’t trust the official currency and flock to dollars on secondary markets.
Lebanon: Lebanon’s banking collapse created multiple rial/USD rates: a central Sayrafa rate, free-market rates over LBP 100,000 per USD, and bid-ask spreads. Lebanese households rely on market rates for remittances and savings, underlining the dangers of dual pricing.

In all cases, currency controls breed parallel markets. Experts (e.g. World Bank analysts) warn that as long as two rates exist, economic planning is distorted and corruption flourishes ^[64] ^[65]. Iran’s situation is analogous: the hundreds-of-percent dollar devaluation outside official channels is a sign the system cannot function normally until rates converge.

Expert Commentary and Outlook

Economists and analysts paint a bleak picture unless policy shifts:

Political Factors: Omar Ahmed (Rudaw) observed that Iran’s rial “diverged from its fundamental value” amid political uncertainty, surpassing IRR 1,000,000/USD before speculators caused a brief pullback ^[66]. This indicates that beyond pure economics, expectations (e.g. fears of war or sanctions) heavily drive the market.
Monetary Policy: Economist Mohammad Parsanezhad (cited by Rudaw) notes the CBI has so far treated the subsidized rate as more important than stabilizing the open market rate ^[67]. While this protects staple prices short-term, it undermines confidence in the overall currency. Some analysts argue Iran needs to unify its exchange rates and tackle inflation directly to stop the spiral.
Sanctions Play: State media in Iran often blames “external enemies” for the currency woes. At the same time, some Iranian policy experts warn that unless Iran’s hard-currency earnings (oil exports, trade) increase – which depends on sanctions relief or new markets – dollar shortages will persist.
Global Views: International agencies and media note the fragility. Reuters and Al Jazeera highlight how each new sanction announcement immediately sends the rial lower ^[68] ^[69]. U.S. Treasury emphasizes Iran’s reliance on “shadow banking” to move money ^[70], suggesting continued sanctions efforts will keep Iran isolated.

In summary: As of late 2025, the US dollar trades for roughly IRR 1.08–1.13 million on Iran’s black market ^[71] ^[72], many times the old official rate. Iranians who need or want dollars turn to street exchangers, hawala, and even crypto. The Central Bank tries to manage via a controlled ETS and subsidized windows, but liquidity is tight. Renewed sanctions, massive inflation (~50%), and political uncertainty all feed a cycle: the weaker the rial gets, the more people flee into dollars or foreign assets. This situation mirrors crises in other closed economies, underscoring the difficult trade-offs of exchange controls in a sanctions-hit economy.

Sources: Iranian Central Bank/CEIC data ^[73]; Reuters and AP reports ^[74] ^[75]; Iran International and Al Jazeera analyses ^[76] ^[77]; expert interviews and journalism ^[78] ^[79]; U.S. Treasury sanctions releases ^[80]. All figures and quotes are from these authoritative reports.