The Iranian rial has had its fair share of ups and downs, but the hit it took during Donald Trump’s presidency was one for the history books. When the U.S. pulled out of the Iran nuclear deal in 2018 and reimposed heavy sanctions, Iran’s economy went into a tailspin. The “maximum pressure” campaign wasn’t just a political move—it sent shockwaves through Iran’s financial system, pushing the rial into freefall. Prices skyrocketed, businesses struggled, and everyday Iranians felt the squeeze like never before. But what exactly caused this dramatic crash? How did Iran try to fight back? 

Let’s find out the key moments that led to one of the most severe currency crises in Iran’s history.

Key Events That Led to the Iranian Rial’s Collapse:

• Withdrawal from JCPOA: In 2018, President Trump withdrew the United States from the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal. The agreement, signed under the Obama administration in 2015, had lifted numerous economic sanctions on Iran in exchange for restrictions on its nuclear program. By pulling out of the deal, the U.S. reinstated severe sanctions on Iran, cutting off its access to international markets and financial institutions. This action triggered a sharp decline in the value of the Iranian rial.
• Maximum Pressure Campaign: The “maximum pressure” campaign launched by Trump aimed to cripple Iran’s economy through a series of extensive sanctions. These measures targeted vital sectors such as oil exports, banking, and shipping. By restricting Iran’s ability to sell its oil—the backbone of its economy—the country faced a severe foreign currency shortage, causing the rial to depreciate dramatically. From 2018 onwards, the rial lost over 90% of its value, fueling economic turmoil.
• Sanctions Reinstatement in 2025: Even after Trump’s administration, the effects of his policies lingered. The reimplementation of additional sanctions in 2025 under similar pressure tactics further weakened the rial. By this time, the exchange rate had reached historic lows, with the rial trading at nearly one million per U.S. dollar, showcasing the devastating impact of long-term economic restrictions.

How the Maximum Pressure Campaign Impacted Iran’s Economy

• Economic Isolation: One of the main consequences of the maximum pressure campaign was Iran’s increasing economic isolation. The country was cut off from the global financial system, making it nearly impossible for businesses to conduct international transactions. This limitation drastically reduced Iran’s foreign exchange reserves, forcing the central bank to implement strict currency controls that failed to prevent further devaluation.
• Inflation and Poverty: With limited access to foreign currency, Iran struggled to import essential goods, leading to rising prices and skyrocketing inflation. Official inflation rates have consistently remained above 30%, with some estimates suggesting even higher levels for consumer goods. As purchasing power declined, many Iranians fell below the poverty line, exacerbating economic inequality and social unrest.

The Role of Hyperinflation in Rial Depreciation

• Hyperinflationary Pressures: Iran’s inflation rate, bordering on hyperinflation, played a crucial role in the rapid depreciation of the rial. As prices soared, public confidence in the currency eroded, leading to increased demand for more stable assets such as U.S. dollars, euros, and gold. This demand further weakened the rial, creating a vicious cycle of devaluation.
• Currency Flight: As the rial continued to lose value, Iranians sought alternative means to protect their wealth. Many converted their savings into foreign currencies or cryptocurrencies, further draining Iran’s foreign currency reserves. Capital flight intensified the financial crisis, forcing the government to impose strict currency exchange regulations to prevent further depreciation.

Iranian Government Strategies to Counter the Decline

• Regulatory Measures: To combat currency devaluation, the Iranian government implemented several regulatory measures. These included limiting currency exchange transactions, cracking down on the black market, and encouraging the use of digital currencies. However, these efforts were largely ineffective in restoring confidence in the rial.
• Economic Diversification: Recognizing its overreliance on oil exports, Iran attempted to diversify its economy by investing in manufacturing, agriculture, and technology sectors. However, these efforts faced numerous challenges due to ongoing sanctions and limited foreign investments. Without significant structural reforms, economic diversification remained slow, offering little relief to the rial.
• International Diplomacy: Iran has pursued diplomatic efforts to negotiate sanctions relief, including discussions with European and Asian allies. However, geopolitical tensions and a lack of trust between Iran and Western powers have hindered meaningful progress. Without successful negotiations, the rial remains vulnerable to further depreciation.

Long-Term Effects of Sanctions on Iran’s Currency Future

• Sustained Economic Pressure: The long-term impact of economic sanctions has created a challenging environment for Iran’s financial stability. With continued restrictions on oil exports and financial transactions, Iran struggles to maintain sufficient foreign currency reserves. As a result, the rial’s volatility is likely to persist in the foreseeable future.
• Potential for Reform: Despite the challenges, Iran has opportunities to stabilize its currency through economic reforms. Policies aimed at controlling inflation, boosting non-oil exports, and fostering foreign investments could help strengthen the rial. However, these reforms require significant political will and international cooperation, both of which remain uncertain.

Final Thoughts

The drastic depreciation of the Iranian rial during Trump’s administration highlights the profound impact of geopolitical decisions on national economies. The JCPOA withdrawal, the maximum pressure campaign implementation, and subsequent sanctions led to economic isolation, hyperinflation, and severe currency devaluation. 

While Iran has taken steps to mitigate these effects, long-term recovery remains uncertain without structural economic reforms and improved diplomatic relations. Until these issues are addressed, the Iranian rial will continue to face instability, making it a high-risk currency for investors and a source of financial hardship for Iranian citizens.