The 12-day war and its fragile ceasefire have deepened the structural crises of Iran’s economy. The already ailing economy, previously suffering from severe imbalances in energy, banking, currency, and pension systems, is now trapped in deeper instability, a severe recession, and growing challenges.
Currency market and uncertainty about price increases
Following the Iran-Israel conflict, financial markets entered a recession. The insecure environment and the unstable ceasefire have brought trading to a halt, inflicting serious damage on the economy. With the outbreak of the war, exchange rates surged, and the price of the US dollar even surpassed 950,000 rials. Despite currency interventions and a security clampdown, rates have not returned to pre-war levels.
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Stock market: heavy decline and loss of trust
Iran’s stock market has experienced a sharp decline over the past two weeks, with capital steadily flowing out. Supportive policies such as market closures, stock insurance, and capital injections have failed to stop the crash. The sell-off continues even after the ceasefire, and the Central Bank’s announcement of a 6 trillion rial injection has not restored investor confidence.
Gold and cryptocurrency markets in forced stagnation
Investors have turned to gold, cryptocurrencies, and fixed-income funds, but to prevent capital flight, the Central Bank has restricted the gold and crypto markets. With restrictions on rial payments and online platform operations, gold trading has effectively halted, and assets have been frozen.
Recession in the housing market
The uncertain environment has pushed the housing market into recession as well. A drop in buyers, an increase in sellers, and capital flight have led to an 8% decrease in asking prices in Tehran. However, despite the price drop, transactions are not occurring, and listings are remaining unsold for extended periods.
Damage to businesses and cost of living
War-related insecurity has led to widespread closures or stagnation of businesses, especially small enterprises. Fear of attacks has even prevented workers from showing up at bakeries. The war has disrupted land and sea transportation to regional countries and rising international insurance premiums for ships have raised import costs. According to an official report, food prices in June rose by more than 10% compared to the previous month.
Rising job insecurity and wave of layoffs
Fear over the end of the ceasefire has led people to cut spending, resulting in widespread stagnation across most businesses. Only essential shops remain open. Declining sales, rising production costs, and falling revenues have pushed companies toward layoffs. The firing of 150 journalists from major media outlets and partial payment of salaries are further signs of the employment crisis.
Damage to infrastructure, banks, and exchanges
The country’s infrastructure has been damaged during the war, and its reconstruction will require significant resources. Cyberattacks on Sepah and Pasargad banks have caused serious disruptions, while the attack on the “Nobitex” exchange led to a theft of $100 million. Currency reserves have also been diverted to military and cyber-security sectors, putting additional pressure on the public budget. Internet shutdowns imposed by the regime have cost the economy $400 million. These factors will widen the budget deficit and intensify future inflation.
