Economy minister fired as Iran’s rial falls to nearly one million to the US dollar

The firing of Abdolnasser Hemmati came amid growing concerns over the crashing rial and accusations of mismanagement just six months into President Masoud Pezeshkian’s new government.

Pezeshkian, who defended Hemmati, emphasised that the government is locked in a tough battle with the West. He called for greater unity and cooperation from Parliament to face these challenges.

The decision comes amid rising tensions over Iran’s nuclear program and worsening relations with the West. Iran’s economy has been severely affected by international sanctions, especially after the US withdrew from the 2015 nuclear deal.

In 2015, the rial was worth 32,000 to the dollar, but by the time Pezeshkian took office in July, it had plummeted to 584,000 to the dollar. Recently, it dropped even further, with exchange shops in Tehran trading 930,000 rials for every dollar.

According to a post on X by Steve Hanke, Professor of Applied Economics at St John Hopkins University in the United States, the Iranial rial is the third worst performing currency in the world.

During the impeachment proceedings, Mohammad Qasim Osmani, a lawmaker supporting Hemmati, argued that rising inflation and exchange rates were not the fault of the current government or Parliament.

He pointed to the budget deficit left by the previous administration, which he said contributed to the economic instability. Osmani also cited recent geopolitical events as factors that undermined public confidence, causing many people to convert their savings into foreign currency, which in turn further devalued the rial.

Hemmati acknowledged the tough economic climate during his five months in office, including a 10% reduction in inflation.

However, he acknowledged that inflation remained high, standing at 35%. He assured lawmakers that his team was working hard to address the issue, but warned that the process would take time.

This latest development is another chapter in Iran’s ongoing political and economic struggles as the country continues to navigate a complex relationship with the international community.