Iran's rial hits new low against dollar as economy reels

The Iranian rial fell to a new low against the US dollar on Saturday as the economy reels under pressure from the COVID-19 pandemic and US sanctions.

The dollar was selling for as much as 304,300 rials on the unofficial market, up from 295,940 on Friday, according to the foreign exchange site Bonbast.com.

The economic daily Donya-e-Eqtesad's website gave the dollar rate as 303,300, up 6,000 rials from Friday.

The currency has lost about 56% of its value in 2020 as a drop in oil prices has deepened the economic crisis in the country, which also has the highest COVID-19 death toll in the Middle East.

The official exchange rate - used mostly for imports of state-subsidised food and medicine - is 42,000 rials per dollar.

The United States on Thursday slapped fresh sanctions on Iran's financial sector, targeting 18 banks to further choke off Iranian revenues as Washington ramps up pressure on Tehran weeks ahead of the US election.

Iranian central bank governor Abdolnaser Hemmati dismissed the sanctions as political propaganda and played down their practical impact.

"What needs to be decided in this regard was decided two years ago," Hemmati was quoted as saying by Iranian media. "Therefore, the banks that were party to the agreement with Iran have decided to continue trading with Iran."

Analysts said the sanctions may further deter European and other foreign banks from working with Iran, even for permitted humanitarian transactions.