The Iranian rial dropped to an all-time low of 600,000 for a U.S. dollar yesterday as its economic crisis deepens.
Over the last five years, since the U.S. reimposed sanctions on Iran, the local currency has dropped by 565,000 to the greenback, according to Iran International. The drop triggered inflation that has reached over 50 percent, plunging millions of Iranians into poverty and sparking protests across the country.
Although home to some of the world's largest oil and especially gas reserves, Iran has in recent years been constrained by U.S. sanctions in making the most of these as well as any other resources.
Despite the sanctions, which specifically target Iran's oil and gas industry and its banking sector, the country has actually been increasing the volumes of oil it ships abroad in recent months.
Iran has been exporting around 1 million barrels per day of crude oil and condensates, according to data from Kpler, TankerTrackers, and Vortexa, cited by Deutsche Welle.
Although much lower than pre-sanction export levels, which averaged 2.5 million bpd, these volumes are a substantial increase from the 2020 average, which was just half a million barrels daily. Most of the oil Iran exports goes to China.
Meanwhile, Iran is increasingly using the Chinese currency in oil and non-oil international business dealings and planning to boost this use even further.
The Iranian economy minister said earlier this month that "a certain part of exchanges in Iran's trade with China has been carried out in RMB Yuan - Chinese currency, since the beginning of the current Iranian year (March 21, 2022)."
The official added that the central bank of Iran is in talks with Beijing to expand the use of the yuan in as many bilateral trade deals with China as possible, replacing the U.S. dollar and the euro.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More