Sanctions, the rial and persistent high inflation

After the United States withdrew from the nuclear agreement in May 2018 and reimposed oil and banking sanctions, Iran's oil exports and access to foreign exchange fell sharply. The rial lost a large share of its value on the open market within months, and consumer-price inflation, which had been below 10 percent in 2016 and 2017, rose above 40 percent in 2019 and stayed at roughly that level or higher in the following years. The Central Bank of Iran responded with a multiple-exchange-rate system, using a subsidised official rate for essential imports alongside a market rate, which created large gaps and opportunities for arbitrage. With sanctions limiting the use of conventional tools and the government financing deficits through the banking system, money growth stayed high, so the inflation and exchange-rate series show a long period of persistent price pressure rather than a one-off spike.