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Iran's Rial Slump Sets Stage for Donald Trump's Economic 'D-Day
0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. The rial fell to a record 2.02 million to the dollar on Monday, setting the stage for President Donald Trump's so-called "economic D-Day"—his latest gambit to bring the months-long conflict with Iran to a conclusion.
Trump has said his two main priorities in a war-ending deal with Tehran are ensuring it never develops a nuclear weapon and securing free passage for commercial shipping through the Strait of Hormuz, a vital route for global energy supplies.
The renewed economic pressure on Iran, which will include a fresh round of wider sanctions, will be yet another test of whether U.S. power can deliver the results Trump wants after previous U.S. pressure campaigns failed to deliver.
The further collapse of the rial will add to an inflationary spike that is squeezing households tighter than ever. Past economic shocks have triggered mass unrest against the regime in Tehran, protests subdued with state brutality.
A deepening economic crisis spurred on by intensified American financial pressure is a threat to the endurance of a regime whose security forces have so far held together, and may push Iran to a dangerous limit .
The U.S.-Israeli war that began on February 28 is approaching six months, while an American naval blockade has made it extremely difficult for Iran to export oil, its most valuable product.
The International Monetary Fund expects Iranian inflation to approach 70 percent this year and the economy to contract by more than 5 percent.
U.S. Treasury Secretary Scott Bessent has promised the "toughest sanctions in history," including pressure on countries and companies that continue doing business with Iran. He is set to unveil the full plan on Monday.
The Iranian regime has already lost another economic cushion. The United Arab Emirates, long an important trading partner and re-export hub that helped Tehran blunt sanctions, has suspended trade with Iran in recent days.
All of these pressures mean Trump’s self-described "economic D-Day" is landing on an economy whose defenses have already been weakened. Whether weakness becomes leverage remains an open question to which we are nearing an answer.
The rial’s collapse is significant because the informal exchange rate against the U.S. dollar is the rate most Iranians pay. A state-administered dollar rate stood at around 1.57 million rials on August 24.
The weaker market rate increases costs for households and businesses that cannot obtain dollars through official channels, particularly for imports and goods whose prices track the dollar.
Those pressures predated the current war, although the latest annual growth estimate also covers its opening weeks.
The World Bank estimates that Iran’s economy contracted 2.7 percent in the 2025/26 Iranian year, which ended March 20, 2026, and projects that high inflation and declining real incomes will suppress domestic demand.
It also expects sanctions, transport problems and difficulty obtaining insurance to continue constraining international trade.
Economic hardship has been a key driver of anti-government protests in recent years, with rights groups accusing Iranian security forces of killing large numbers of demonstrators during crackdowns.
For Washington, the rial serves as a visible gauge of whether sanctions and other forms of economic pressure are reaching Iran's domestic economy.
A sustained slide would suggest sanctions and the blockade are further reducing confidence in Tehran’s ability to defend purchasing power and, by extension, contain public discontent.
But stabilization of the currency would indicate that Iran still has ways to cushion the shock and prevent either a renewed burst of social unrest or a fracturing of the regime.
The political effect is harder to predict. Economic distress can increase pressure on governments, but it does not automatically translate into diplomatic concessions.
Iran has so far resisted U.S. demands despite the war and remains capable of disrupting shipping through the Strait of Hormuz, leaving Trump's economic campaign intertwined with a broader contest over military leverage and diplomacy.
China is one key test of Trump's "D-Day." Beijing bought more than 80 percent of Iran’s shipped oil in 2025, according to Kpler data, cited by Reuters. It has also purchased Iranian oil, albeit much less, during the course of the war.
Beijing’s response to new U.S. sanctions is therefore central to how much additional income Washington can deny Tehran.
War damage, the blockade, and shrinking trade routes have created conditions earlier sanctions campaigns never had, giving the latest round of Trump sanctions a new advantage.
Monday’s Treasury announcement should show whether "D-Day" reaches beyond additional designations toward credible pressure on Iran’s remaining major buyers.
The signals to watch are in Iranian oil exports, Chinese purchases, and the path of the rial itself.
Further declines across all three would strengthen Washington’s claim that this pressure is different, and so more effective.
A broad stabilization, however, would point to the similar enforcement limits that constrained earlier efforts and raise even more skepticism about Trump's Iran strategy.
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