On Monday, the Iranian rial fell to its lowest ever. It broke through the 50,000 rial to the dollar mark.

Around 25 per cent of the value of the rial has been lost in the past few months alone.

Furthermore, the gap between that and the official rate is widening even further. At the beginning of the week it was at 37,686.

In March, the government of the Islamic Republic had no option but to take extreme steps to stop the free market rate from declining even further. Speculators’ accounts were frozen, interest rates were raised and foreign exchange dealers were arrested. The people, however, were not deterred and many Iranians were seen queuing outside foreign exchanges a few weeks ago.

Economic experts are saying that the problem is more “psychological” than economic because there is no reason for the purchase of dollars unless they are to be sold at a higher rate in the future. They say that it is a kneejerk reaction to the worries that US President Donald Trump will pull out of the nuclear deal. The concerns grew when he replaced two members of his administration with tough, anti-Iranian regime figures.

Officials in Iran have urged people to stop hoarding dollars. They say that local banks are running out of cash and there are billions of dollars being hoarded.

The economic situation has been gradually declining for many years, and the current situation is a blow to the Rouhani government which hoped to gain significant foreign investment following the signing of the nuclear agreement.

However, potential investors are already restricted because of non-nuclear sanctions imposed by the United States. Therefore, the collapsing currency means that there will be even less interest from potential investors.

The Iranian government has not – at least not yet – unified the free-market and official rates because doing so would mean that imports become more expensive and inflation would rise.

owever, it is precisely the gap between the two markets that has affected trade and led to even more corruption.

After years and years of over-construction, the Iranian housing market boom steadied off so hoarding dollars could be considered the new way to store money. To cancel the effects of this, banks in Iran were offering interests rates up to around 20 per cent.

The situation in Iran is critical and the worsening economy is having adverse effects on the lives of millions. Social conditions are getting worse and commodities are getting more expensive. All the while, high officials in the Iran are revelling in riches.

It must also be noted that the Iranian rulers have been spending billions on funding militias and proxy groups across the region.