Current Currency and Financial Issues of Iran

The study focuses on Iran’s monetary and financial challenges between 2018 and 2025, which are caused by a complex combination of external and internal factors that have impacted the country’s economic situation. External factors, such as sanctions imposed on Iran, have restricted its access to global capital markets and contributed to the country’s financial difficulties. Internal factors like the specific functioning of the banking system, institutional limitations, and monetary policy decisions, including the use of multiple exchange rates, also contribute to these challenges. The purpose of this study is to investigate the role of both external and internal factors in the emergence and evolution of Iran’s monetary and financial challenges between 2018 and 2025. We employ methods of comparative and structural analysis as well as statistical analysis of macroeconomic data sourced from official government reports. Through our analysis of these economic issues, we have been able to draw the following conclusions. Firstly, international sanctions, restrictions on oil exports, the disconnection of the banking sector from global payment systems, and the blocking of assets have significantly reduced the space for maintaining macroeconomic stability and weakened the stability of the national currency. Secondly, internal imbalances, including inefficient currency regulation, vulnerable banking systems, high levels of problematic assets, and limited independence of financial institutions, have increased the impact of external shocks and contributed to the formation of persistent inflation and reduced confidence in the Rial. Monetary and financial instability in Iran is caused by external restrictions imposed on internal institutional and structural vulnerabilities. To maintain macroeconomic stability in modern times, it is essential to adapt to external challenges while also implementing consistent institutional changes that affect monetary policy, the transparency and competitiveness of the foreign exchange market, and the organization of the banking sector. The results of this study have practical value, as they provide a systematic approach to understanding the dynamics of monetary aggregates, inflation, and exchange rates in Iran. By identifying the relationships between external and internal factors that contribute to monetary and financial instability, we can develop solutions to improve the country’s financial situation and conduct comparative and applied research in global finance.

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