Iran’s currency has fallen to a record low amid growing fears of renewed international sanctions tied to its nuclear dispute with the West.

On the foreign exchange market, €1 now costs 1.18 million rials, an increase of 20 per cent compared to a month ago. The rial is also trading at over 1 million to the U.S. dollar.

The decline comes as Germany, France, and the United Kingdom consider triggering the “snapback” mechanism at the United Nations Security Council.

This mechanism would reinstate previous UN sanctions, including a general arms embargo and punitive measures against Iranian individuals and organisations.

The process could begin as early as Thursday if Iran does not back down.

Tehran has so far rejected the terms for a new nuclear agreement, particularly demands to halt its independent uranium enrichment programme.

Western powers remain concerned that Iran may be seeking to develop nuclear weapons, an accusation Iran strongly denies.

Despite its vast oil and gas reserves, Iran has faced a prolonged economic crisis, largely due to sanctions related to its nuclear programme. After the 2015 Vienna nuclear agreement, €1 was worth less than 40,000 rials.

However, during his first term, U.S. President Donald Trump unilaterally withdrew from the deal, reimposing harsh U.S. sanctions.

Economists warn that further sanctions could drive up inflation even more, pushing higher the cost of essential goods, such as food, electricity, water, gas, and petrol. 

Many of Iran’s nearly 90 million citizens are already grappling with severe financial hardship.

(dpa/NAN)