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Iran's Currency Reached A Six-Month Low On Monday

A man counts his banknotes and traveler checks in Tehran, August 21, 2019

Iran’s currency rial lost more value against the U.S. dollar on Monday reaching a low of 138,000. One month ago, the rial was trading just above 120,000 to the dollar.

The 15 percent drop started with widespread anti-government protests on November 15 and has since continued. This is the lowest point for the rial in the past six months.

Since 1978, the Iranian rial has depreciated almost 2,000-fold. Before the Islamic revolution (1979) one dollar bought just 70 rials.

Since then, the rial has steadily fallen but in the last two years its value has decreased fourfold, fueling a 40 percent inflation. The main reason that precipitated the decline was stringent U.S. economic sanctions, especially on Iran’s oil exports, which finance a substantial part of the government budget.

Gold also gained on Monday and the euro was trading at 152,750 rials.

The falling value of the national currency directly leads to higher inflation. A lot of everyday consumer necessities and industrial raw materials are imported and when the local currency loses value imports become more expensive leading to higher inflation.