Iran’s currency weakened sharply on Thursday as European nations prepared to trigger the return of United Nations sanctions under the snapback mechanism, deepening economic pressure on the Islamic Republic and adding to uncertainty around its nuclear program.
The sharp drop extends a steady decline in the rial over recent weeks. Currency dealers quoted the dollar at around 1,030,000 rials on the open market, according to local reports, compared to 957,000 rials last week.
Reuters has reported that Britain, France and Germany could begin the snapback process as early as Thursday after Iran failed to resume talks or restore cooperation with the International Atomic Energy Agency. The three countries set a late August deadline earlier this month.
Markets react to snapback risk
The currency’s continued slide has heightened concerns among traders and the public, as sanctions could further restrict Iran’s access to global markets and increase pressure on imports, inflation, and employment.
Once triggered, the snapback process leads to the automatic reimposition of UN sanctions after 30 days unless the Security Council adopts a resolution to continue lifting them — a step that any permanent member can veto.
The measures would freeze Iranian overseas assets, ban arms deals with Tehran, and penalize missile development activities. They could also affect oil sales to China, one of Iran’s top customers.
Earlier this month, Iran International reported that Iran’s Intelligence Ministry has warned senior officials and companies to prepare for renewed economic disruptions. Confidential guidance cited risks of "severe currency fluctuations, reduced purchasing power, increased unemployment, layoffs, and heightened social discontent."
Business group warns of worst-case currency spike
Iran’s Chamber of Commerce this week published a report forecasting three scenarios for the economy in the event of snapback sanctions. In its most pessimistic case, the rial could fall to 1.65 million per dollar, with annual inflation reaching 90 percent by the end of the year. Economic growth was projected to remain negative under all scenarios.
Time running out
The current UN resolution allowing use of the snapback mechanism is set to expire on October 18. Russia, which will assume the rotating presidency of the UN Security Council that month, has floated proposals to extend the measure. After the resolution expires, any future effort to restore UN sanctions would likely face a veto from China or Russia.
Under the existing mechanism, any party to the 2015 nuclear deal can initiate snapback by notifying the Security Council of Iranian non-compliance. Sanctions would then be automatically reinstated after 30 days unless the Council votes to continue lifting them — a step that can be blocked by any permanent member.
In recent weeks, Iran has made only limited diplomatic efforts to prevent that outcome. Foreign Minister Abbas Araghchi said last week that talks alone were unlikely to avert further escalation, noting that negotiations had been ongoing when the June conflict with Israel erupted. “Sometimes war is inevitable,” he said in an interview with state media.
The IAEA, meanwhile, has called for inspections to resume “as soon as possible.” Inspectors were recently present to observe fuel replacement at the Bushehr nuclear reactor, operated with Russian support, but broader access to key enrichment and research sites remains suspended.
The Islamic Republic risks losing the ability to fund its health system, said Reza Jabbari, a member of parliament’s presiding board, during a meeting with Health Minister Mohammadreza Zafarghandi.
“Based on submitted reports, 70 percent of insurance resources are spent on medicine and equipment, which could be significantly reduced through strategic purchasing,” Jabbari added.
Without reform, he said, demographic and dietary pressures could create in health care the same shortage already seen in Iran’s energy sector.
Iran may soon face a surge in chronic and non-communicable diseases, Jabbari warned.
“The country will no longer be able to pay health costs if the current situation continues.”
Debt to the pharmaceutical supply chain
The warning came a day after Shahram Kalantari, head of Iran’s Pharmacists Association, described the government as “the main debtor to the pharmaceutical supply chain.” Insurers have failed to pay most of their obligations this year, he said.
“Health Insurance owes us $100 trillion rials ($100 million), Social Security owes $150 trillion rials ($150 million), and the Daroyar plan owes $90 trillion rials ($90 million) since July,” Kalantari said Tuesday.
The drug industry can only remain stable for 170 to 180 days if payments continue to be delayed, he cautioned. After that, shortages of essential medicines are likely.
Kalantari has previously said 80 percent of pharmacies in the country are on the brink of bankruptcy due to mounting debts from insurers and subsidy programs.
Rising burden on households
Other lawmakers have also highlighted the growing strain on families. Fatemeh Mohammadbeigi, deputy chair of the parliament’s Health Committee, said Iranians now pay about 70 percent of medical costs out of pocket.
She described the insurance system as “inefficient and near bankruptcy” due to poor management and a failure to consolidate coverage.
“This figure should be reversed, with people paying 30 percent and the government 70 percent,” Mohammadbeigi said earlier this month. Falling insurance coverage particularly harms low-income groups, she added.
Labor activists have also pointed to shrinking access. Abbas Shiri, a board inspector for the National Construction Workers’ Union, said on August 2 that fewer than 50,000 workers have gained insurance since 2020, leaving hundreds of thousands waiting.
The combined warnings from lawmakers, pharmacists, and labor groups underscore a health system burdened by debt, demographic pressures, and inadequate insurance coverage, with officials conceding that sustainability is in doubt.