Iran's rial loses 12% against the dollar in 27 days as Tehran narrows talks to Hormuz

A dollar that bought 2.2 million rials on Sept. 2 bought more than 2.5 million on Tuesday ^[1][2]. So the dollar now buys at least 13.6% more rials ^[1]. Anyone holding rials lost at least 12% of their dollar value in those 27 days, about 0.47% a day compounded ^[2][3]. The rate is the one traders in Tehran quote ^[1], and the currency has set new lows again and again since the war began in February ^[3]. Fortune blames the freefall on the US naval blockade on Iranian oil and the sanctions added since the war started ^[4].

The seven-day offer Trump turned down ^[9] asked for three things that would each put cash in Tehran's hands. In return Iran offered one thing it controls, the strait. Since then Araghchi has talked about less. He told Iranian media on Monday that the "current focus is solely on the Strait of Hormuz" ^[6]. He also described a relay with no date attached: "They are set to raise the matter with the American side once more, after which the final U.S. response will be conveyed to us," he said ^[7].

I think the currency and the shorter agenda are connected. A government whose money loses close to half a percent of its dollar value every day has reason to ask for less. Fortune reports the two facts side by side but does not link them, and nothing in the report shows Iran has dropped any condition from the rejected offer ^[9]. The Revolutionary Guard reads the situation the other way. Its spokesman, Gen. Hossein Mohebbi, said Washington "has no choice but to acknowledge defeat and leave the region" ^[11]. "This is how the war will end," he said ^[12]. The Guard is betting on the American calendar. Gasoline prices driven up by the conflict loom large in the Nov. 3 election ^[13], and Trump's own forecast puts the end of the war after that vote ^[14].

Look at what Washington declined to buy. By refusing the offer ^[9] it kept Iranian oil off the market and accepted higher gasoline prices going into the election ^[13]. Rubio made the case in cash terms: "when you're denying them money through oil sales and sanctions, you're not just punishing them," he said ^[16].

The first possible outcome is that the relay returns a US answer Tehran accepts for less than it asked ^[7][9]. In the second, Washington waits past Nov. 3 ^[14]. At September's pace, a dollar would then fetch about 2.95 million rials by election day ^[5]. In the third, Tehran holds out on the Guard's bet that gasoline prices move Washington first ^[11][13]. I lean toward the first, because Tehran's cost compounds daily through the exchange rate while Washington's falls on one date ^[3][13]. That view is wrong if Tehran's reply to the relay again demands blockade relief, frozen assets and oil waivers together.

Fortune's report does not include crude prices or Iranian export volumes. The case that Hormuz is the main variable for oil rests on the strait being the war's chokepoint ^[17] and on the gasoline prices the conflict has already pushed up in the US ^[13].