Iran’s currency falls to an all-time low as Trump clinches presidency

Sub: IR

Sec: Places in news

Context:

The Iranian rial hit an all-time low, trading at 703,000 rials to the U.S. dollar.
This sharp depreciation occurred as Donald Trump secured a second term as U.S. President, which has raised concerns over future economic pressures on Iran.

Rial’s depreciation:

In 2015, during Iran’s nuclear deal with world powers, the exchange rate was 32,000 rials to $1. By July 2024, when President Masoud Pezeshkian took office, the rate had risen to 584,000 rials to $1.
The country’s economy has faced prolonged challenges due to international sanctions, particularly from the US, which were imposed over Iran’s nuclear program.

Iran’s Nuclear Program and Economic Sanctions:

Iran’s nuclear program, which has made significant advancements in enriching uranium, particularly to near weapons-grade levels, has been a key factor in the sanctions imposed by the international community.
The U.S. has been a major driver of these sanctions, leading to economic isolation for Iran.

Iran Nuclear Deal:

The Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, is an agreement reached in 2015 between Iran and six major world powers: the United States, United Kingdom, France, Russia, China, and Germany (the P5+1).
The deal aimed to limit Iran’s nuclear program in exchange for the lifting of international sanctions that had crippled Iran’s economy for years.
Iran agreed to reduce its stockpile of enriched uranium and limit enrichment to 67% purity, which is far below the 90% threshold needed for weapons-grade material.

Withdrawal of US:

In 2018, President Donald Trump withdrew US from JCPOA and re-imposed economic sanctions on Iran, which severely impacted its economy.
The US withdrawal and the subsequent reimposition of sanctions prompted Iran to gradually scale back its compliance with the nuclear deal, enriching uranium to higher levels and increasing its stockpiles of enriched uranium.
With Donald Trump back in office, the sanctions on Iran are expected to rise further.