(Bloomberg) -- Iran’s currency is feeling the pain of rising tension with the U.S.
The rial weakened to its lowest level in more than six months on the black market following the killing of Qassem Soleimani, one of Iran’s most senior commanders, by the U.S.
The currency has depreciated 4.3% to 139,500 per dollar since the news of Soleimani’s death in a Baghdad drone strike on Jan. 3 emerged, which could further hit Iranians already suffering from high inflation. Tehran’s stock market has also declined.
Global markets have been roiled by the threat of a conflict in the Middle East, with U.S. President Donald Trump toughening his rhetoric against Iran and threatening sanctions against Iraq if it expels U.S. forces. Emerging-market equities fell the most in almost two months on Monday. Brent oil prices climbed above $70 a barrel to head for their highest close since May.
The flare-up exacerbates the plight of Iran’s economy, crippled by U.S. sanctions on oil and other exports and by shortages of foreign exchange. Protesters took to the streets in November after the government raised gasoline prices.
Although the rial has an official rate of 42,000 per dollar, the Islamic Republic’s central bank operates a system of multiple exchange rates.
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