What Happened to the Currency of Iran?

What Happened to the Currency of Iran?

The currency of Iran, the Iranian rial (IRR) has long been at the center of economic turbulence in Iran, but in recent years, its decline has reached alarming levels. While it hasn’t technically hit zero, the rial’s value is so close to it that it is increasingly regarded as functionally worthless.

The combination of sanctions, runaway inflation, chronic mismanagement, and nationwide unrest has turned the rial into a shadow of its former self. Let’s dive into the factors contributing to the collapse of the currency of Iran, its current state, and why it feels like the currency of Iran has become zero.

Factors Behind the Rial’s Collapse

Sanctions

The impact of international sanctions cannot be overstated. Beginning with the 1979 revolution, and escalating after the U.S. left the nuclear deal in 2018, sanctions crippled Iran’s ability to export oil, access global markets, and stabilise its economy. The loss of foreign revenue triggered inflation and caused the rial to plummet.

Inflation and Mismanagement

Runaway inflation has also played a critical role. With rates often exceeding 40% annually, basic goods became more expensive at an alarming rate. Alongside this, economic mismanagement and poor governance have prevented Iran from diversifying its economy, leaving it reliant on oil exports. This compounded the rial’s decline.

The Iran-Iraq War (Rhia)

The Iran-Iraq War (1980-1988), also known as Rhia, had a long-lasting effect on Iran’s economy. The war drained the nation’s resources, forcing the government to print more money to finance military spending. This caused inflation and further weakened the rial. The war also led to international sanctions, isolating Iran from global trade, further undermining its currency.

Current Unrest and Conflict

While Iran is not currently engaged in a full-scale war, ongoing regional conflicts and domestic unrest have worsened the economic situation. The 2025–2026 protests sparked by rising inflation, the depreciation of the rial, and severe economic hardship have further destabilised the country. These protests reflect public frustration over the rial’s collapse, as prices soar and savings evaporate.

Additionally, military tensions with Israel and other regional powers have increased economic uncertainty, making it even harder for Iran to attract foreign investment. These geopolitical tensions and domestic unrest only add fuel to the fire, pushing the rial to its current crisis point.

How Weak Is the Iranian Rial Today?

The scale of the rial’s depreciation is staggering. Here’s how it compares to other global currencies:

• 1 USD = ~1.4 million IRR (on the open market)
• 1 EUR = ~49,000 IRR
• 1 IRR = $0.0000010 USD (1 millionth of a dollar)

At these exchange rates, the rial has essentially lost almost all its purchasing power, especially when compared to major global currencies like the USD or EUR. To put it into perspective, 100,000 IRR is only worth about $0.10 USD. This is a clear indication of just how far the rial has fallen.

The Iranian Rial Hit Zero

Interestingly, when you search for the exchange rate of 1 IRR on platforms like Google, it may appear as though 1 Iranian rial equals zero when converting to major currencies like EUR and GBP. This is because the rial’s value is so low that Google rounds it down to zero for easier display.

For example, 1 IRR might show as 0 EUR or 0 GBP, but when converted to currencies like the Japanese yen (JPY) or the Chinese yuan (CNY), you will see values like 0.00014 JPY or 0.00000 CNY for 1 IRR. While these values are still tiny, they demonstrate that the rial’s value is measurable, albeit extremely low.

This rounding effect shows how little the rial is worth on the global market, and how functionally worthless it has become in real-world exchanges.

What Does It Mean When Money Stops Working?

When a currency loses value rapidly, it stops serving its basic functions:

• Savings Evaporate: As inflation outpaces wages, savings lose value. Many Iranians turn to foreign currencies like USD or gold for protection.
• Prices Reset Weekly: In a hyperinflationary environment, prices change weekly, creating constant instability. Basic goods are often priced in foreign currencies, not rials.
• Temporary Medium of Exchange: Money becomes a temporary exchange rather than a store of wealth. Iranians spend rials immediately to avoid further devaluation.

What Is Being Done to Address the Crisis?

Iran has explored a few measures to mitigate the impact of the rial’s collapse. One of the most prominent attempts has been redenomination: removing zeros from the currency to make it seem more manageable.

However, this move is largely symbolic, as it doesn’t restore the rial’s underlying value. A 1,000,000 rial note might be redenominated as a 1 new toman note, but the actual purchasing power of the currency doesn’t improve.

Despite these efforts, the rial remains in a state of collapse, with little hope of immediate recovery unless Iran can secure economic reform, improve governance, and see a reduction in sanctions.

Is the Currency of Rial Worthless Now?

The currency of Iran hasn’t technically hit zero, but for many Iranians, it might as well have. With 1 IRR = $0.0000010 USD, and prices skyrocketing, the rial has become a symbol of economic despair. The causes of this collapse are multifaceted, involving sanctions, inflation, mismanagement, and structural economic weaknesses.

When money stops functioning as a store of value and medium of exchange, the entire economic system begins to unravel. For Iranians, the rial has gone from being a practical means of trade to a currency that measures despair more than value.

Until fundamental changes take place in both Iran’s internal economic policies and its relationships with the global community, the rial is unlikely to recover. For now, it remains a stark reminder of the destructive power of prolonged economic mismanagement and political isolation.

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