DUBAI, United Arab Emirates (AP) â Iranâs national rial currency dropped to a record low Wednesday while a U.S. naval blockade has increased pressure on its already battered economy amid a fragile ceasefire.
Experts warn that the rialâs slide is likely to further fuel inflation in a country where many imported goods, from food and medicine to electronics and raw materials, are affected by the dollar rate.
The blockade has cut into a key source of government revenue and hard currency by stopping or intercepting oil shipments. Iranâs leaders are betting that an economy built to be self-reliant under decades of international sanctions can endure the pain.
Four weeks into the ceasefire that has largely halted fighting in Iran, the U.S. and Iran remain locked in a standoff over the Strait of Hormuz, through which a fifth of the worldâs traded oil and gas passes in peacetime.
The straitâs closure is putting pressure on both sides and impacting the world economy, pushing up prices for food, fuel and other products made from petroleum. Frustration is mounting, as dozens of nations this week repeated calls to open the critical waterway for both humanitarian and economic relief.
Proposal rejected
Meanwhile, U.S. President Donald Trump rejected Iranâs proposal to reopen the Strait of Hormuz in exchange for lifting the blockade, he told Axios on Wednesday.
Iranâs proposal, shared with U.S. leaders this week, sought to postpone discussions around Iranâs nuclear program, leaving unresolved the disagreements that led the U.S. and Israel to go to war on Feb. 28.
âThe blockade is somewhat more effective than the bombing,â Trump told Axios. âAnd it is going to be worse for them. They canât have a nuclear weapon.â
The Iranian proposal would have pushed negotiations on the countryâs nuclear program to a later date, two regional officials said earlier this week. The officials with knowledge of the proposal spoke on condition of anonymity to discuss the closed-door negotiations between Iranian and Pakistani officials.
One of the major reasons Trump has said he went to war was to deny Iran the ability to develop nuclear weapons.
Pakistani Prime Minister Shehbaz Sharif said Wednesday his government was continuing efforts to help ease tensions between the U.S and Iran following an initial round of direct talks on April 11.
Cost of war hits $25 billion for U.S.
The U.S. has spent an estimated $25 billion so far on the Iran war, a top defense official said during a Congressional hearing Wednesday.
Much of that has gone toward munitions, but the expenses also include running the operations and replacing equipment, Jules Hurst III, the acting undersecretary of war for finances, told the House Armed Services Committee.
Iranâs currency plummets after holding steady
Iran’s rial had remained stable in the early weeks of the war, in part because there was little trading or imports. Its slide began this week, hitting a record low Wednesday of 1.8 million to the dollar.
The hit comes months after a currency shock helped fuel nationwide protests in January, deepening public anger over rising prices and fears about the countryâs economic future.
Iranâs economy has faced decades of sanctions, chronic inflation and a widening gap between official and open-market exchange rates.
Prices of basic household goods had already been rising before the rialâs latest fall, adding to pressure on families. Over the past two weeks, people buying daily essentials have faced higher prices for milk, yogurt, cooking oil, bread, rice, cheese and detergents.
The increases point to broader inflationary pressure in the economy driven by uncertainty, supply disruptions, higher transport and production costs and the continuing impact of the U.S. blockade. The rialâs latest slide is likely to add further pressure particularly on goods tied to imports, packaging and raw materials.
___
Associated Press writers Munir Ahmed in Islamabad and Collin Binkley and Stephen Groves in Washington contributed to this report.
Copyright 2026 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.