The US dollar has surged against the Iranian rial to reach IRR 898,500, posting a 3.3% increase on the previous sales session on Tehran's Ferdowsi Street on February 8, following the US' renewed so-called "maximum pressure" campaign. 

On the first day of the Iranian working week, the latest daily dollar rally pushed the greenback up 5.5% in just one week and 11% over the past month over US President Trump's refocused targeting of the country's oil exports and potential threats of "obliteration." 

The surge rippled across all major currencies, with the euro climbing 3.47% to IRR 928,300, while the British pound sterling advanced 3.46% to IRR 1,114,400. The UAE dirham and Turkish lira followed suit, rising to IRR 246,700 and IRR 25,050, respectively, representing increases of 3.22% and 3.73%.

In contrast, the official exchange market painted a different picture, with the Central Bank of Iran (CBI) reporting more modest rates. The official dollar rate stood at IRR 689,530, with payment order rates at IRR 670,750, while the euro traded at IRR 712,170 with payment orders at IRR 692,770. The UAE dirham settled at IRR 187,750 in the commercial market, with payment order rates reaching IRR 182,640.

Demand for the dollar has surged dramatically, with sellers becoming increasingly scarce. Market players report that the supply of hard currency has dried up, fuelling further speculation and price hikes, with hawkers on Ferdowsi Street selling the US dollar at rates above IRR900,000 by late February 8.

People moving to crypto-havens 

A large chunk of demand is now moving online to cryptocurrencies, including Tether (USDT). Although it sells at slightly higher prices than hard currency, the USDT price is now nearly as important as the dollar itself. Bitcoin traders also report bumper traffic with the blockchain crypto, which is popular in Tehran. 

While recent discussions about Iran’s potential acceptance into the Financial Action Task Force (FATF) and US overtures for negotiations briefly lifted sentiment, the renewed prospect of tougher US sanctions has reignited inflationary fears and driven demand for safe-haven assets, especially following Supreme Leader Ayatollah Ali Khamenei’s recent comments in which he strongly advised against negotiations with the US calling them "unwise."

Sources familiar with the matter revealed that recent settlement issues with UAE dirham transactions have been resolved, with operations expected to normalise after the global weekend. This development could potentially strengthen the central bank's capacity for market intervention, though traders remain sceptical about its impact on the broader market, given the overwhelming influence of political factors and Trump's campaign rhetoric targeting Iran.

Some government critics blame the Economy Ministry's hasty decision to halt operations in the secondary currency market (NIMA) as the key contributing factor behind the dollar price jump.

The measure aimed to end the unhealthy policy of dictating rates for exporters and importers and ultimately boosting currency repatriation to the country. The plan also prepared the ground for adopting a single rate regime in the currency market, though the prices now have a 33% difference.

Market data indicate that the dollar has gained about 48% over the past six months, while the new currency market was established about a month ago.

Iran rules out negotiations with Trump

Following the currency issues, Iran's Foreign Minister Abbas Araghchi ruled out negotiations with the United States under its "maximum pressure" campaign while stressing Iran's dual approach to handling sanctions.

"Lifting sanctions requires negotiations, but not under maximum pressure policy. Negotiations cannot take place from a position of weakness as that would not be negotiation but surrender - we will never come to the table in such a manner," Araghchi said on February 8 at Iran's sixth Methanol Seminar in Tehran.

The foreign minister outlined Iran's two-pronged strategy: working to remove sanctions through negotiation while simultaneously nullifying their impact through self-reliance. "Nullifying sanctions is our priority and a general duty," he said.

"Iran has never abandoned negotiations and won't do so. However, the JCPOA experience showed the US cannot be trusted, and Iran won't allow such breaches to be repeated. Iran does not seek talks with a country that simultaneously signs new sanctions documents," Araghchi stated.