Iran’s Currency Slides after Europe Moves to Reimpose Sanctions

Iran's rial approached record lows after major European powers took punitive steps against the Islamic Republic for failing to honor its nuclear commitments. The currency dropped to 1,040,000 against the US dollar in the unregulated market, close to historic lows around 1,050,000 seen in late March. The slide followed the UK, France, and Germany's decision to refer Iran to the United Nations for breaching the 2015 nuclear accord, triggering a 30-day "snapback" mechanism that could restore sanctions. Iran’s rial approached record lows on Saturday after major European powers took punitive steps against the Islamic Republic for failing to honor its nuclear commitments.

The currency dropped to 1,040,000 against the US dollar in the unregulated market on the first day of Iran’s working week, according to online currency trackers and a Tehran-based trader. That came close to historic lows around 1,050,000 seen in late March.

The slide followed Thursday’s decision by the UK, France, and Germany to refer Iran to the United Nations for breaching the 2015 nuclear accord, triggering a 30-day “snapback” mechanism that could restore sanctions previously lifted under the deal. Iranian President Masoud Pezeshkian said Tehran is determined to avert fresh sanctions.

“We’re by no means seeking the activation of the snapback,” Pezeshkian said in a televised interview late Thursday. “We have put all our efforts into preventing such an outcome.”

The US welcomed Europe’s move, while emphasizing that Washington remains open to “direct engagement with Iran” for a “peaceful, enduring resolution.” Earlier, Iranian Foreign Minister Abbas Araghchi called the referral “immoral, unjustified, and unlawful,” warning it would “severely undermine” Iran’s ties with the UN atomic watchdog.

The rial’s renewed weakness follows a brief rally earlier this year, when the currency gained about 20% on optimism around revived nuclear talks between Tehran and Washington that began in April. Those negotiations collapsed in June after Israel carried out military strikes on Iran, just days before a planned sixth round of discussions in Oman.

Iran has since warned it could withdraw from the global Nuclear Non-Proliferation Treaty if the three European nations press ahead. Tehran maintains its nuclear program is strictly peaceful and accuses Washington of undermining the 2015 accord by withdrawing from it in 2018 and by bombing its nuclear facilities in June, both under US President Donald Trump. - Bloomberg