(Bloomberg) -- Iran’s rial weakened to a fresh record low on the unregulated market as investors prepare for a potential escalation of the military standoff between the Islamic Republic and arch-enemy Israel.
The US dollar has been trading at levels close to 700,000 rials since Sunday, according to an average of rates and prices quoted by Tehran-based traders on Telegram and the website Bonbast.com. The Iranian currency has lost about 27% of its value against the greenback this year, with the weakening accelerating since late September, when Israel stepped up its offensive against Iran-backed Hezbollah in Lebanon.
“The recent events, inflationary expectations, and the semi-war situation in the country over the past few weeks have caused this psychological effect on the market,” Iranian Economy Minister Abdolnaser Hemmati said in televised statements last week.
The currency has fallen markedly since the US’s 2018 withdrawal from a landmark nuclear accord between Tehran and world powers. Its depreciation has accelerated as tensions between Iran and the West have worsened, particularly since the Oct. 7 attack by Iran-backed Hamas last year, which pushed the shadow war between Iran and Israel into the open. Hamas and Hezbollah are considered terrorist organizations by the US and many other countries.
On Monday, Iran’s foreign ministry said it would use all available means to retaliate against an Israeli strike on its military facilities on Oct. 26, itself a response to a direct missile attack from Iran at the start of that month. Supreme Leader Ayatollah Ali Khamenei on Saturday said his forces will deliver a “crushing response” to the Jewish state.
Shares on the Tehran Stock Exchange fell in recent days, according to reports by state media. Live prices and indices on the TSE website are not available outside Iran.
Threats by Iran and Israel against one another signal to the market “war and conflict will continue,” Farzin Aghabozorgi, a capital markets analyst based in Tehran, was quoted as saying by the moderate Etemad newspaper on Monday.
--With assistance from Arsalan Shahla.
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