In the wake of a dramatic surge in the value of the U.S. dollar against the Iranian rial after the death of three Americans in a drone strike by Iran-backed militants at the end of January 2024, Iranians experienced familiar feelings of shock and trepidation as well as a pervasive sense of uncertainty about the future.
On January 29, the rial plummeted by more than 15 percent to 580,000 to the dollar on the open market before recovering to about 558,000 a week later.
Iran’s currency has experienced a steady decline since the 1979 revolution punctuated by occasional sudden shocks such as in 2012, when the currency lost half its value after the imposition of draconian U.S. sanctions. More than a third of Iranians are classified as poor by the government’s own standards. Unemployment is near 10 percent, according to government figures, while inflation is over 50 percent.
Rising tensions over the war in Gaza and fear that it could lead to a wider conflict directly involving Iran have undermined confidence that the situation will improve.
This analyst prepared a questionnaire submitted to more than two dozen Iranians of different socio-economic backgrounds to shed light on the toll currency fluctuations play and the coping mechanisms they employ to survive. Following are summaries of the responses of four Iranians, who are identified only by their first names to protect them from government retribution.
Ghasem
Ghasem, 50, is a house painter and father of two sons who earns about $240 a month. “Our life is determined by our income, not by what we desire,” he replied to a question about the impact of currency fluctuation. “We live according to the income we have. We cannot wear the clothes we want, but instead, what we can afford to buy. We can’t eat the food we like; we can’t go on trips.”
Ghasem added that he cannot afford a new car or household appliances or to entertain guests. His family is living with his father to avoid paying rent. The family shopping basket has shrunk and is of lower quality. If something breaks, he cannot afford to fix it. For example, one of his children’s mobile phones is broken but he has not yet been able to afford repairs.
Those who were poor have become poorer, Ghasem said. Employees and day laborers are experiencing a very unpredictable situation. Government subsidies of about $8 a month have not been paid. But the dollar appreciation has benefited the wealthy with access to hard currency, he said.
Raziyeh
Raziyeh, 40 and the mother of a daughter, described life as a challenging and exhausting journey, especially since last year when her husband had a severe accident that caused a head injury and required surgery. Nonetheless, he works at a grocery store, bringing home about $120 monthly. This is supplemented by a monthly disability benefit of the same amount from a government welfare organization (Sazman-e Behzisti).
Raziyeh makes and sells homemade foods to augment their household income. They live in her father-in-law’s house to avoid paying rent. The fluctuations in the economy have drastically altered her lifestyle. Travel is no longer an option, family gatherings have been significantly reduced, and brand name food and clothing are also out of reach. She estimates that their purchasing power has been reduced to a third of what it was just a few years ago. To cope, she meticulously plans and has secured loans from relatives to pay for necessities such as insurance, car maintenance, appliance repairs, and house upkeep.
Raziyeh is acutely aware of the widening gap between rich and poor. As the former get richer, they appear greedier and prey on the vulnerabilities of the less fortunate. She cites unfair wage practices that coerce desperate people to accept jobs with inadequate compensation, highlighting an urgent need for systemic change.
Faat
Faat, residing in Tehran and aged 35, is married without children. She is the sales and financial manager of a company that makes industrial containers. Her monthly income is around $400. Because of the drop in the value of the rial, she said she no longer takes recreational trips abroad and that her goal to buy a house has become an unattainable dream.
With reduced purchasing power, Faat has cut back on consumption of red meat. Last year, she bought plenty of clothes, but not this year. She believes wealthy people are benefiting because they know how to make money and invest, while the poor get poorer. Even in these difficult economic conditions, some rich people start factories, she said.
As a company’s sales manager, she checks a website each morning for the price of iron. If the value of the dollar has risen, the price of iron goes up. The company may increase prices for its products or suspend sales until the dollar goes down. So, it’s the consumers who pay, not the producers. One problem in Iran is that even when the dollar falls, prices don’t automatically decrease. When the dollar rose for a week, consumers continued to make purchases believing that the surge would continue. She believes that the one-week rise in the dollar was caused by a conflict between the Central Bank of Iran, which wanted to inject more currency into the market, and currency traders.
Metanat
Metanat is a housewife and mother of two daughters. Her husband is the breadwinner, working as a jeweler and a landlord. Economically, they are considered well-off. Metanat was not willing to share their monthly income. She understands that when the dollar price increases, family necessities from a loaf of bread to other grocery items become more expensive for everyone.
Despite her family’s relative affluence, their lifestyle and purchasing habits have changed. For instance, she used to shop at brand-name stores for her eldest child’s clothes but rarely does now. Before the pandemic, she used Estée Lauder and other imported cosmetics, but can no longer afford them.
Metanat said the family is not able to buy the kind of car she wants or purchase luxury home appliances. She said her husband works ten times harder than a few years ago but makes less. Metanat’s strategy for navigating life with dollar fluctuations involves planning and purchasing lower-quality goods. While acknowledging that “money brings money,” she contends that even the wealthy have seen a diminution in living standards and quality of life.
Conclusion
The narratives depict a society in flux, where economic instability shapes the contours of daily life. They are a reminder that behind the statistics of financial analyses lie the realities of millions struggling to cope with uncertainty and preserve dignity. The impact of sanctions, particularly those reimposed by the U.S. after it withdrew from a landmark nuclear agreement, has also undermined economic growth and pushed more Iranians into poverty. Yet Iranians, despite facing monumental challenges, continue to adapt and strive for a semblance of normalcy and fairness in a world marked by unpredictability and injustice.
Maryam Rezaei Zadeh is a Faculty Assistant and Mentor for Persian House at the University of Maryland and works with the Middle East Perspectives project at the Stimson Center. She received her Masters of Public Policy at the School of Public Policy at the University of Maryland. Her research and academic interests lie at the intersection of international security and relations, focusing on empowering and advocating for women’s and marginalized groups’ rights in the Middle East.
Surviving the Rial Plunge: Voices from Iran’s Economic Frontlines
By Maryam Rezaei Zadeh
Middle East & North Africa
In the wake of a dramatic surge in the value of the U.S. dollar against the Iranian rial after the death of three Americans in a drone strike by Iran-backed militants at the end of January 2024, Iranians experienced familiar feelings of shock and trepidation as well as a pervasive sense of uncertainty about the future.
On January 29, the rial plummeted by more than 15 percent to 580,000 to the dollar on the open market before recovering to about 558,000 a week later.
Iran’s currency has experienced a steady decline since the 1979 revolution punctuated by occasional sudden shocks such as in 2012, when the currency lost half its value after the imposition of draconian U.S. sanctions. More than a third of Iranians are classified as poor by the government’s own standards. Unemployment is near 10 percent, according to government figures, while inflation is over 50 percent.
Rising tensions over the war in Gaza and fear that it could lead to a wider conflict directly involving Iran have undermined confidence that the situation will improve.
This analyst prepared a questionnaire submitted to more than two dozen Iranians of different socio-economic backgrounds to shed light on the toll currency fluctuations play and the coping mechanisms they employ to survive. Following are summaries of the responses of four Iranians, who are identified only by their first names to protect them from government retribution.
Ghasem
Ghasem, 50, is a house painter and father of two sons who earns about $240 a month. “Our life is determined by our income, not by what we desire,” he replied to a question about the impact of currency fluctuation. “We live according to the income we have. We cannot wear the clothes we want, but instead, what we can afford to buy. We can’t eat the food we like; we can’t go on trips.”
Ghasem added that he cannot afford a new car or household appliances or to entertain guests. His family is living with his father to avoid paying rent. The family shopping basket has shrunk and is of lower quality. If something breaks, he cannot afford to fix it. For example, one of his children’s mobile phones is broken but he has not yet been able to afford repairs.
Those who were poor have become poorer, Ghasem said. Employees and day laborers are experiencing a very unpredictable situation. Government subsidies of about $8 a month have not been paid. But the dollar appreciation has benefited the wealthy with access to hard currency, he said.
Raziyeh
Raziyeh, 40 and the mother of a daughter, described life as a challenging and exhausting journey, especially since last year when her husband had a severe accident that caused a head injury and required surgery. Nonetheless, he works at a grocery store, bringing home about $120 monthly. This is supplemented by a monthly disability benefit of the same amount from a government welfare organization (Sazman-e Behzisti).
Raziyeh makes and sells homemade foods to augment their household income. They live in her father-in-law’s house to avoid paying rent. The fluctuations in the economy have drastically altered her lifestyle. Travel is no longer an option, family gatherings have been significantly reduced, and brand name food and clothing are also out of reach. She estimates that their purchasing power has been reduced to a third of what it was just a few years ago. To cope, she meticulously plans and has secured loans from relatives to pay for necessities such as insurance, car maintenance, appliance repairs, and house upkeep.
Raziyeh is acutely aware of the widening gap between rich and poor. As the former get richer, they appear greedier and prey on the vulnerabilities of the less fortunate. She cites unfair wage practices that coerce desperate people to accept jobs with inadequate compensation, highlighting an urgent need for systemic change.
Faat
Faat, residing in Tehran and aged 35, is married without children. She is the sales and financial manager of a company that makes industrial containers. Her monthly income is around $400. Because of the drop in the value of the rial, she said she no longer takes recreational trips abroad and that her goal to buy a house has become an unattainable dream.
With reduced purchasing power, Faat has cut back on consumption of red meat. Last year, she bought plenty of clothes, but not this year. She believes wealthy people are benefiting because they know how to make money and invest, while the poor get poorer. Even in these difficult economic conditions, some rich people start factories, she said.
As a company’s sales manager, she checks a website each morning for the price of iron. If the value of the dollar has risen, the price of iron goes up. The company may increase prices for its products or suspend sales until the dollar goes down. So, it’s the consumers who pay, not the producers. One problem in Iran is that even when the dollar falls, prices don’t automatically decrease. When the dollar rose for a week, consumers continued to make purchases believing that the surge would continue. She believes that the one-week rise in the dollar was caused by a conflict between the Central Bank of Iran, which wanted to inject more currency into the market, and currency traders.
Metanat
Metanat is a housewife and mother of two daughters. Her husband is the breadwinner, working as a jeweler and a landlord. Economically, they are considered well-off. Metanat was not willing to share their monthly income. She understands that when the dollar price increases, family necessities from a loaf of bread to other grocery items become more expensive for everyone.
Despite her family’s relative affluence, their lifestyle and purchasing habits have changed. For instance, she used to shop at brand-name stores for her eldest child’s clothes but rarely does now. Before the pandemic, she used Estée Lauder and other imported cosmetics, but can no longer afford them.
Metanat said the family is not able to buy the kind of car she wants or purchase luxury home appliances. She said her husband works ten times harder than a few years ago but makes less. Metanat’s strategy for navigating life with dollar fluctuations involves planning and purchasing lower-quality goods. While acknowledging that “money brings money,” she contends that even the wealthy have seen a diminution in living standards and quality of life.
Conclusion
The narratives depict a society in flux, where economic instability shapes the contours of daily life. They are a reminder that behind the statistics of financial analyses lie the realities of millions struggling to cope with uncertainty and preserve dignity. The impact of sanctions, particularly those reimposed by the U.S. after it withdrew from a landmark nuclear agreement, has also undermined economic growth and pushed more Iranians into poverty. Yet Iranians, despite facing monumental challenges, continue to adapt and strive for a semblance of normalcy and fairness in a world marked by unpredictability and injustice.
Maryam Rezaei Zadeh is a Faculty Assistant and Mentor for Persian House at the University of Maryland and works with the Middle East Perspectives project at the Stimson Center. She received her Masters of Public Policy at the School of Public Policy at the University of Maryland. Her research and academic interests lie at the intersection of international security and relations, focusing on empowering and advocating for women’s and marginalized groups’ rights in the Middle East.
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