Global Politics

Iran's Currency Woes

In the diplomatic battle between the United States and Iran, economic sanctions are a key US weapon.

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But knowing if the sanctions are working is not an exact science.

Right now, though, there's evidence that Iran could be feeling the financial heat from those sanctions.

The value of Iran's currency has taken a steep drop, about 17 percent since Friday – hitting a new record low against the US dollar.

That could be because Iran's hard currency reserves are low, as a result of sanctions and a weakening economy.

Nazila Fathi, a fellow at Harvard's Belfer Center, says that sanctions are hitting Iran's ability to export oil.

But it's not enough to have eaten up Iran's known currency reserves, Fathi says.

Those reserves stood at over $100 billion at the end of last year, according to the International Monetary Fund.

Fathi says critics within Iran are blaming the government's mismanagement rather than sanctions.

What's clear is that ordinary people are paying the price, says Fathi, in terms of price inflation on essential goods like food and gas.