Iran International
Foreign exchange rates, which have a critical impact on economic life, fluctuate frequently depending on where they are traded, adding to the anxiety of businesses and ordinary Iranians enduring inflation and sanctions.
The Iranian rial hit an all-time low in March, trading at one million per US dollar in March as tensions with the United States flared.
Now ahead of a third round of Iran-US nuclear talks in Oman on Saturday, the open market rate for the dollar was around 810,000 rials, while two government-controlled rates, the EST and the official rate for importing basic goods stood at 692,000 and 280,000 respectively.
Ordinary people, who often convert their savings into hard currency or gold during periods of political and international uncertainty, generally only have access to the open market.
Many businesses — and even some semi-official entities — also turn to the open market when they cannot access foreign currency through official channels or when they require immediate liquidity.
In recent years, successive governments have attempted to reform Iran’s tangled foreign exchange system to curb corruption fueled by cronyism, where favored individuals, groups and state entities secure access to cheaper rates to import goods that are later sold at much higher open market prices.
The reforms have mostly failed because entrenched political networks benefiting from the system oppose them.
The open market
Iran’s open or free foreign exchange market operates largely outside government control. It consists of authorized currency exchange shops or sarrafi as well as informal street-level transactions.
The open market -- where currencies like the US dollar, Euro, and UAE dirham are the most actively traded -- reflects real-time supply and demand. Prices in the open market are heavily influenced by inflation expectations, political risks, sanctions developments and broader economic conditions.
Open market rates typically run significantly higher than the officially controlled rates, particularly during times of instability and often provide the clearest snapshot of Iran’s underlying economic and political realities.
They serve as a crucial, unofficial benchmark that influences pricing, import costs, and inflation across the country.
The government occasionally intervenes, injecting foreign currency through selected sarrafi or cracking down on street traders they deem illegal when volatility escalates amid ramped up political tension or rapid devaluation.
Official rates for staples, medical goods
This rate, currently 285,000 rials to the dollar, is provided through designated banks to importers of basic goods such as wheat, rice, and animal feed as well as medicine and medical supplies.
The decision on allocation of this type of currency lies with related ministries and the Central Bank of Iran (CBI).
An earlier preferential rate for these imports fixed at 48,000 rials has now been almost completely scraped.
Electronic Trading System (ETS) rates
The ETS rate, closer to the free-market rate, is set by supply and demand within the Electronic Trading System (ETS) of the Iran Center for Currency and Gold Exchange.
Established in late February 2022, the center was intended to provide a formal platform for cash currency exchanges to undercut the open market.
While exchange rates on ETS are determined by market forces, the CBI actively supervises the platform, intervening by injecting or limiting foreign currency supplies to influence rates.
This managed market — accessible to licensed banks and exchange offices — handles both cash transactions and informal transfers called hawala. Transactions that previously took place through a system dubbed NIMA are now also routed through ETS.
The defunct NIMA system
The NIMA system, an acronym for integrated system of foreign exchange, was created to regulate foreign currency earned through exports and allocate it for imports of non-essential goods and services. It was officially scrapped in January.
Within NIMA, transactions occurred between exporters and importers under CBI supervision, with the central bank setting a floor and ceiling for permissible exchange rates.
For years, NIMA served as the government’s primary tool for managing the trade balance and controlling the flow of foreign currency.
Its elimination marked a significant shift toward market-based pricing mechanisms — albeit still heavily managed — through the ETS platform.
Corruption amid multiple rates
Several major corruption scandals have rocked Iran in recent years, many of which stem from its multi-tiered exchange rate system.
The Debsh Tea Company scandal is one of the most recent and possibly largest embezzlement cases in the history of the Islamic Republic.
High-ranking officials from various ministries, the Customs Administration and the Central Bank were implicated in the scandal that first came to public attention in 2023.
The family-owned company received $3.37 billion in subsidized foreign currency (at the NIMA rate) to import tea and machinery but sold $1.4 billion of the currency it had received in the open market at higher rates, did not import the promised equipment and allegedly imported low-quality tea it labelled as premium-grade.
The explosion on Saturday which has devastated Rajaei Port, the country's largest container port near Bandar Abbas, has halted 57% of the country's nominal loading and unloading capacity.
Although Iranian customs officials announced that some customs and transit activities have resumed, full port operations are still suspended pending the complete extinguishment of the fire.
Cleanup efforts are underway, with Interior Minister Eskandar Momeni saying that about 80% of firefighting operations had been completed by Sunday afternoon.
At least 28 people have been killed and more than 1,000 injured.
The Ministry of Health has declared a state of emergency in Bandar Abbas, citing serious air pollution and the risk of chemical contamination. Authorities have also shut down all schools, universities, and government offices in the city as a precaution.
Rajaei Port processes about 85% of Iran’s container cargo and 52% of its oil product trade, according to the Iranian Ports and Maritime Organization.
Over the past Iranian year (March 2024 - March 2025), the port handled over 81 million tons of goods — over half of Iran’s total maritime cargo traffic — and $29 billion of Iran’s $130 billion foreign trade.
In the container sector, Shahid Rajaee handles a dominant 77% of the country's nominal container capacity, equivalent to 6.65 million TEUs (twenty-foot equivalent units), out of 11 active container ports. The next largest, Bushehr, has a capacity of just 550,000 TEUs.
A rough estimation suggests that each day of disruption at the port potentially halts the movement of an estimated 221,000 tons of various goods, including 61,000 tons of containerized cargo and 75,000 tons of oil products.
The cause of the explosion remains under investigation. A source with ties to Iran’s Islamic Revolutionary Guard Corps told the New York Times that the blast was triggered by sodium perchlorate, a chemical used in solid rocket fuel.
Less than a month before the explosion, reports indicated the arrival of the Jairan, an Iranian cargo ship linked to the transport of missile components from China to Bandar Abbas.
The Jairan, owned by the US-sanctioned Islamic Republic of Iran Shipping Lines (IRISL), delivered a cargo of sodium perchlorate to the port in late March, following a similar delivery by the MV Golbon in February, according to The Maritime Executive.
The substance is processed in Iranian facilities such as Parchin and Khojir to produce ammonium perchlorate, which constitutes 70% of the fuel for Iran’s solid-fueled ballistic missiles, including the Kheybar-Shekan, Fattah, Fateh-110, and Zolfaghar missiles.
On Sunday, an Iranian defense ministry spokesperson said that there were no military-use shipments among the import or export cargo at the port, adding that foreign media had been spreading rumors regarding the incident.
Iran’s moderate Ham-Mihan newspaper suggested sabotage was a likely cause, noting the coincidence of the blast with the resumption of expert-level talks between Iran and the United States.
Comparisons have been drawn between the Rajaei Port explosion and the 2020 Beirut port disaster. Lebanese authorities said the explosion was triggered by a fire in a warehouse with a huge stockpile of ammonium nitrate fertiliser - commonly used for ammunition and explosives - which had been negligently stored for years.
Rajaei Port, ranked 59th among the world's major ports, is considered vital for Iran’s economy, with no immediate alternative to its vast cargo-handling capacity.
Iranian officials said a full assessment of the damage and a timeline for complete restoration would be announced after the fire is fully extinguished.
During his visit to Moscow for the 18th session of the Iran-Russia Joint Economic Commission, Paknejad said on Thursday that the deals form part of broader efforts to expand strategic cooperation across sectors, including energy, finance, and agriculture.
“The potential for trade between Iran and Russia is far greater than the current $5 billion level,” he said, adding that additional memoranda of understanding are under negotiation in the oil and gas sectors. “Expert groups are actively working to finalize these talks and turn them into binding contracts.”
The oil minister also announced plans for a new nuclear power plant to be constructed in the country, financed by a credit line from Moscow.
Paknejad also said that discussions are underway on importing natural gas from Russia in an initial phase, followed by gas swaps and transit to other countries. “This is one of the key areas of interest for both sides,” he said. “We have had detailed negotiations, and only a few items remain before finalizing the first-phase import volumes.”
The minister added that the latest agreements follow the ratification of a long-term strategic cooperation treaty between Tehran and Moscow. “This is the first joint commission meeting since the treaty’s approval last week, and it opens new pathways for economic collaboration,” he said.
Separately, Saeed Tavakkoli, managing director of Iran’s National Gas Company, said progress has been made on an earlier agreement with Russia to transfer gas to northern Iran, where domestic production is limited. “This plan will help meet energy needs in northern provinces and contribute to Iran’s goal of becoming a regional gas hub,” he said.
Tavakkoli added that while further technical assessments are needed, current negotiations have been effective, and the project aligns with the targets of Iran’s seventh development plan.
The agreements come as Western sanction -- isolating Russia over Ukraine and Iran for its nuclear program, regional role, and human rights -- have spurred a rapid deepening of their ties.
Their shared predicament, alongside a common interest in countering US influence, underpins their growing partnership. Both nations are also exploring ways to bypass these restrictions, including using national currencies and alternative financial channels for trade.
