The Iranian Rial is one of the most worthless currencies in the world.
The 100,000 Rial banknote is only worth $3.33 as of 10/2/2015. This is the highest currency note they have.
There are 500,000 and 1,000,000 notes called Iranian Cheques which are used in the same way as cash.
Nearly 50% of Iran’s economy is based on the sales of oil, however, with the price of oil so low, their economy is suffering:
On Monday, September 14, 2015, Iran’s Rial slipped to 35k per 1 USD. It was 29k per 1 USD around this time in 2013, so it’s becoming weaker with each passing year. What this recent fall shows me is that the economy of Iran is still quite weak, fragile if you will, and the government of Rouhani has literally no way to better the currency economic situation in the country. For those investors who think now is a good time to purchase the Iranian currency, you might want to reconsider, especially since it’s illegal to purchase the currency under current US sanctions.
Here is the executive order discussing the sanctions, currently in place:
Fars, which is their state-run news agency, has stated that now, in September/October 2015, that this is the highest exchange rate against the dollar we have seen in at least the last 2 years.
The current budget deficit for Iran has now reached 50% for 2015. This is according to Mohammad Bagher Nobakht, who is the current head of Iran’s MPO (Management and Planning Organization). The plunging in the prices of oil over the last year are a contributing factor. Oil is now about $40 per barrel, and some analysts have stated it could drop to near $30.
Numerous analysts, people who study the Iranian markets and economy, feel that even if oil prices did not drop, even if they were much higher, Iran would still have issues with their economy and bankruptcy. The war in Syria and also Iran’s backing of the Houthis group (located in Yemen, who are associated with the Quds in Iraq) have not helped their currency.
The price of Iranian oil was estimated at $70 a barrel when Hassan Rouhani’s administration set this year’s budget; but oil prices now stand at $40 a barrel.
Finally, and possibly something to consider, most of Iran’s current economy is based upon corruption, and unless that goes away, the Iranian Rial will continue to remain weak.
The nuclear deal between Iran and the US (as well as five other world leaders) which took place in July of this year, reduced the price of foreign money as well as gold, so it appeared the Rial was starting to strengthen, but alas, it didn’t last. Shortly after the Rial’s appreciating it lost its gains. Many experts thought this nuclear deal would help the economy, but since Iran is currently experiencing severe stagnation, the economy has not recovered.