Iran’s currency, the rial, lost more than 30 percent of its value relative to the dollar in early January, bolstering those who say Western sanctions are taking a serious toll.
With Europe, which buys about 15 percent of Iran’s oil exports, considering a ban on purchases, Iran’s economic isolation looks set to deepen. While that’s something opponents of its nuclear program are cheering, the fallout of a currency collapse could be severe.
Iran’s government has spent much of the past year cutting fuel subsidies and phasing out an annual $4 billion subsidy on bread; 2011 inflation was probably around 20 percent. A collapse in the currency could drive up domestic prices further and threaten the roughly 17 percent of Iranians living below the poverty line.
