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Yes, Iran’s Economy Is Suffering—But It’s Not All About the U.S.

How Will Iranians Respond to the Currency Crisis?

Iranian President Hassan Rouhani addresses the Innovation and Industry Forum during an official visit in Bern, Switzerland, July 2018. Denis Balibouse / REUTERS

Iran’s currency, the rial, has lost two-thirds of its value in the last six months, much of it after the United States formally withdrew from the nuclear agreement in May. In Washington, the fall of the rial is widely seen as a consequence of U.S. sanctions and a sign of economic collapse that could bring down the Iranian regime. While the first claim is generally true, it is overstated, and the second is based on false assumptions.

Although U.S. President Donald Trump has hurt the Iranian economy, the unexpected depth of the rial’s decline owes less to U.S. policy than to poor decision-making in Tehran and structural weaknesses in Iran’s economy. A proper understanding of the factors that deepened the crisis suggests that the country’s acute hardships may ease or disappear as Iran adjusts to the new situation. Iran’s foreign exchange market

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