Key Takeaway: Iran's rial fell to a new record above 1.3 million per U.S. dollar, accelerating a sharp currency decline that began two weeks earlier. A new three-tier gasoline pricing system — which charges 50,000 rials per liter for fuel beyond monthly quotas — could further fuel inflation. Stalled nuclear talks, renewed sanctions and regional tensions are amplifying market anxiety, and economists warn the fall could push up food prices and erode household purchasing power.
Iran's Rial Plunges Above 1.3 Million Per Dollar, Stoking Fears of Higher Food Prices
A man fills his car at a gas station in Tehran, Iran, Saturday, Dec. 13, 2025. (AP Photo/Vahid Salemi)
TEHRAN — Iran's rial weakened further on Monday, sliding to a fresh record low above 1.3 million rials to the U.S. dollar, deepening a rapid collapse that first breached the 1.2 million mark less than two weeks earlier amid sanctions pressure and regional tensions.
Currency traders in Tehran were quoting the dollar above 1.3 million rials, underscoring how quickly the currency has deteriorated since Dec. 3, when the rial hit what was then a historic low.
The sharp depreciation is adding to inflationary pressures and driving up prices for food and other everyday essentials, squeezing household budgets across Iran. Economists warn the trend could be amplified by a recent change to gasoline pricing that increases the cost of fuel purchased beyond monthly quotas.
New Gasoline Pricing Raises Costs
On Saturday, the government introduced a third gasoline price tier, charging 50,000 rials per liter for purchases beyond monthly quotas (roughly 4 U.S. cents at current exchange levels). Under the revised system, motorists continue to receive 60 liters per month at the heavily subsidized rate of 15,000 rials per liter and an additional 100 liters at 30,000 rials per liter, but any extra fuel now costs more than three times the original subsidized price.
Although gasoline remains among the cheapest globally in nominal terms, economists caution that higher fuel costs can feed broader inflation by raising transportation and production costs for food and other basic goods.
Sanctions, Diplomacy and Regional Risks
The currency's fall coincides with stalled efforts to revive negotiations between Washington and Tehran over Iran's nuclear program and lingering fears of renewed conflict after a 12-day confrontation in June involving Iran and Israel. Many Iranians also worry a broader confrontation could draw in the United States, increasing market anxiety.
Iran's economy has been weakened for years by international sanctions, especially after the United States withdrew from the 2015 nuclear accord in 2018. When the 2015 deal was implemented, the rial traded at roughly 32,000 to the dollar. Subsequent U.S. sanctions and additional international measures — including a U.N. 'snapback' of nuclear-related restrictions in late September — have tightened financial and trade pressures on Tehran.
Economists warn that the accelerating decline of the rial risks creating a vicious cycle of higher prices and shrinking purchasing power, particularly for staples such as meat and rice that are central to many Iranian diets. For ordinary families, the new record low reinforces fears that meaningful economic relief remains distant while diplomacy stalls and sanctions persist.
