Iran International:

Maryam Sinaiee

Iran could face fresh shocks to its already deeply rattled currency, costs of living and growth prospects if UN sanctions lifted by a 2015 nuclear deal are reimposed.

Britain, France and Germany on Thursday triggered a 30-day process—the so-called “snapback” mechanism—to restore the international sanctions on Iran over its nuclear program in a formal letter sent to the UN Security Council.

Activation of the snapback mechanism would reinstate comprehensive UN sanctions which would include travel bans, asset freezes, UN inspections of Iranian shipments and arms trade prohibitions—but notably exclude direct sanctions on oil exports or the Central Bank of Iran.

Restrictions on oil and banking have instead come mainly from unilateral US and EU measures imposed after the UN resolutions, which put direct pressure on Iran’s foreign exchange earnings. Energy exports are the state's biggest source of revenue.

Markets react

Renewed UN sanctions would indirectly reduce oil revenues, constrain access to foreign currency and place heavy pressure on the rial.

A weaker rial would raise import costs and production inputs, driving faster inflation. At the same time, the government might be forced to finance deficits through borrowing and money printing while inflation expectations climb, amplifying price pressures.

Markets are already reacting. The rial has lost more than 7.5% of its value on the Tehran open market in recent days.

According to experts at the Tehran Chamber of Commerce (TCC), factors such as declining currency reserves, limited oil sales, rising inflationary expectations and geopolitical risks are the main drivers of the projected surge in the dollar rate.

In a report released on Wednesday, the TCC outlined Iran’s economic outlook if the snapback mechanism was activated, presenting three scenarios—optimistic, likely, and pessimistic—through the end of 2025.

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