President Donald Trump’s administration has shifted from military might to financial muscle as it transforms the conflict with Iran into an “economic war,” and the Iranian rial is among the country’s most vulnerable targets.
Even before the conflict, the volatile and devalued currency was among the biggest sources of unrest among Iranian citizens. Since a new round of sanctions has come through, the rial is beginning to look a lot like monopoly money on the international marketplace.
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Alex Vatanka — a senior fellow at the Middle East Institute who specializes in Iran — told the Washington Examiner that while the rial is “still the currency of everyday business,” public faith in the tender is all but gone. Long-standing U.S. sanctions have ensured that the currency is accepted virtually nowhere outside the national borders, and its domestic volatility makes it a poor store of value.
“The economy is still functioning in the sense that there’s a central government, it still has revenue, and some of that revenue still is being distributed to society [but] it’s not enough,” he explained. “People are getting gradually poorer and poorer, the middle class is shrinking. The teachers are being paid [less], the pensioners are being paid less and less. And the big question for the regime is: how much more tightening of the belt can they engage in before there isn’t any more left?”
Before Operation Epic Fury began, the Iranian economy was already in dire straits. Popular uprisings spilled into the streets from December 2025 into January as common citizens protested a financial crisis that was driving their families into destitution.
At the heart of the turmoil was the collapse of the rial. Rendered unusable overseas and subject to rapid inflation due to policy missteps in Tehran, a single U.S. dollar was worth 1.42 million rial. A brutal crackdown ensued, violently quashing the protests.
As Iran has proven unwilling to bend despite the decapitation of its leadership and widespread destruction of military infrastructure, the U.S. government has sought to twist the knife on the economy and inspire citizens to return to the streets to topple the weakened regime.
Trump launched “Operation Economic Outcast” on Monday — a fresh schedule of sanctions that aims to isolate the Iranian regime utterly and thrust the country into further economic collapse. Those sanctions plunged the currency to an all-time low, with one U.S. dollar worth over 2 million rial.
The question is whether this mass erasure of wealth will be enough to get Iranians back out of their homes and into the streets at the risk of their own lives.
“By pursuing Operation Economic Outcast, the president believes that inflicting economic pain will force the collapse of the regime—or at a minimum render Iranian leaders more amenable to negotiation,” a report released Friday by the Council on Foreign Relations stated. “But Trump may be overstating the potential effect of more economic pain. After all, the economic situation for most Iranians has been bad for years and has only gotten worse since the beginning of the war.”
It continued, “The defenders of the Islamic Republic will not come unprepared. They have already demonstrated a willingness to kill, arrest, and otherwise suppress their own citizens who are seeking change.”
Vatanka told the Washington Examiner that some Iranians are trying to beat the economic collapse quietly by parking their wealth in “physical, tangible assets” and basically “anything other than the rial.”
“The dollar is the king in Iran. Gold is king,” he told the Washington Examiner. “People will buy property. Tehran has property prices that are comparable to Geneva, Oslo — some of the most expensive places worldwide — because people put their money in brick and mortar because it’s safe. Not the rial, because it depreciates. They buy cars … because it’s a physical entity that you can take to the market at some point and sell regardless of whether the rial has depreciated.”
The situation is exacerbated by the U.S. blockade on Iranian oil exports. Tehran has previously been able to generate modest revenue by circumventing sanctions using foreign-flagged ships and selling the oil to countries such as China, with black-market refineries processing the product.
With the blockade, that black market has dried up, and with it, access to payments in foreign currencies, assets such as gold, and even cryptocurrencies.
The conflict in Iran has reached the six-month mark, and there are still no signs of a resolution on the horizon. Iran and Oman have signed on to a proposal that would open two-way shipping lanes through the Strait of Hormuz and reopen the critical waterway.
The U.S. has not signed on to that deal, and White House officials appear uninterested in deal-making at the moment as they lean into this “economic war.”
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“They’re not paying their troops. They’re in deep trouble. They have very little capacity,” Trump said of Iran on Thursday. “We don’t want to speak to them. We’re not looking to meet or anything.”
The president’s remarks specifically highlighted the “massive inflation” plaguing Iran, saying that he has “no time schedule” for solving the conflict as their “economy is falling apart.”
