Iran's rial currency hits new record low as US prepares to announce more sanctions

TEHRAN, Iran (AP) — Iran’s currency hit a record low Monday as Washington prepared to announce new sanctions it said would add further pressure on an economy already battered by previous sanctions and a U.S. naval blockade.

The rial dropped to 2.02 million to the U.S. dollar as trading opened on currency markets. Iran’s official Central Bank rate stood at around 1.5 million rial to the dollar, but the market rate is what most Iranians pay.

The currency had already been under pressure before the U.S. and Israel attacked Iran on Feb. 28, as Iran faced double-digit inflation and negative growth, but has repeatedly hit new lows as nearly six months of war have taken an even greater toll.

Iranians find daily staples increasingly unaffordable. Since the war began, rice is up some 60% and prices of beef are more than 150% higher. The International Monetary Fund forecasts that GDP will contract more than 5%.

Still, economic pressure has not yet translated into political pressure. Iran retains a key strategic advantage: Its attacks and threats on ships in the Strait of Hormuz have brought traffic in the vital waterway to a near halt, damaging the world economy and heaping pressure on U.S. President Donald Trump ahead of congressional elections.

The war, as a result, has devolved into a fight over who controls the strait, through which a fifth of the world’s traded oil transited before the conflict. Iran is now refusing to fully reopen it unless it can charge ships.

Iran and Oman, which is on the opposite side of the strait, are reportedly in the final stages of agreeing upon a plan for joint management of the waterway. Oman’s foreign minister is set to visit Iran on Tuesday.

In an attempt to break the impasse, Trump's administration promised even stronger sanctions than those already in place would be announced Monday, including secondary sanctions on countries that continue to do business with Iran.

Ahead of the announcement, Trump posted on social media that “IRAN IS COMPLETELY COLLAPSING!!!”

“President Trump decimated Iran’s economy to a point where the rial has never been weaker and inflation has rarely been higher,” U.S. Treasury Secretary Scott Bessent wrote Sunday in an opinion piece in the Financial Times. “The regime’s final refuge now lies in the self-deception of fearful nations that still believe accommodating aggression can secure a durable peace.”

Already last week, the United Arab Emirates announced that it was suspending all trade with Iran. The UAE has long been one of Iran’s largest trading partners and its biggest source of imports.

Iranian Foreign Ministry spokesperson Esmail Baghaei told reporters in Tehran on Monday that “any escalation of this situation will undoubtedly bring about consequences."

“Our hands are not tied,” he added.

Pakistan, which played a key role in brokering a 60-day ceasefire in June, sent a high-level delegation to Iran on Monday to discuss ending the war, the military said.

In downtown Tehran, 73-year-old Sadegh Mahmoudi did not hold out hope for a resolution. He joined a line of about a dozen people to purchase U.S. dollars with his remaining savings to hedge against further declines.

“There is no hope for a deal and peace,” he said.

Rising reported from Dubai, United Arab Emirates. Associated Press writer Munir Ahmed in Islamabad contributed.

Current and pre-revolution Iranian banknotes are displayed by a street money exchanger at Ferdowsi square, a hub for foreign currency trading in downtown Tehran, Iran, Monday, Aug. 24, 2026. (AP Photo/Vahid Salemi)

Iranian banknotes are displayed by a street money exchanger at Ferdowsi square, Tehran's go-to venue for foreign currency exchange, in downtown Tehran, Iran, Monday, Aug. 24, 2026. AP Photo/Vahid Salemi)

A money exchanger counts Iranian banknotes at Ferdowsi square, Tehran's go-to venue for foreign currency exchange, in downtown Tehran, Iran, Monday, Aug. 24, 2026. AP Photo/Vahid Salemi)

Current and pre-revolution Iranian banknotes are displayed by a street money exchanger at Ferdowsi square, Tehran's go-to venue for foreign currency exchange, in downtown Tehran, Iran, Monday, Aug. 24, 2026. AP Photo/Vahid Salemi)

A money exchanger counts Euro bank notes at Ferdowsi square, Tehran's go-to venue for foreign currency exchange, in downtown Tehran, Iran, Monday, Aug. 24, 2026. AP Photo/Vahid Salemi)

NEW YORK (AP) — U.S. stocks are drifting Monday ahead of a week packed with potentially market-moving events. The areas of the bond market that the U.S. Treasury Department is trying to calm down, meanwhile, eased a bit.

The S&P 500 slipped 0.3% and pulled a bit further from its all-time high set earlier this month. The Dow Jones Industrial Average was up 49 points, or 0.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.

Tech stocks led the way downward following big swings through the summer on worries that the frenzy around artificial-intelligence technology sent prices too high and that the huge demand for AI chips won’t be sustainable if they don’t produce enough profits.

Chip giant Nvidia has been a tremendous winner of the AI boom and become Wall Street’s largest and most influential stock because of it. It will deliver its latest quarterly earnings report on Wednesday, which could dictate the next big move for AI-related stocks.

Nvidia slipped 0.7% and was one of the heaviest weights on the S&P 500, where the majority of stocks were rising. Drops of 5.5% for Micron Technology and 1.5% for Broadcom also helped drag the index lower.

The other big factor moving stocks recently has been the bond market, where longer-term Treasury yields climbed through the summer on worries about high inflation, huge government debts and other factors. High yields make it more expensive for everyone to borrow, not just the government, and have already been pushing up mortgage rates and hurting the housing industry.

The U.S. Treasury Department announced a surprise move last week to increase the size of planned buybacks of Treasurys, which could help ease the rise in yields for 10- and 30-year Treasurys. But analysts warned the move could have only a limited effect because of how small the size of the buybacks are and how they do not fix the fundamental problems of too-high debt for the U.S. government and expensive oil prices because of the war with Iran.

On Monday, the yield of the 10-year Treasury eased to 4.70% from 4.74% late Friday and is back below where it was late Tuesday, before the U.S. Treasury Department made its surprise announcement.

Analysts warn the U.S. government’s attempts to push longer-term yields downward could ultimately mean higher pressure on inflation. Inflation already is higher than nearly everyone would like and has been for years.

That raises the pressure on the Federal Reserve to raise the federal funds rate that it controls, which affects very short-term overnight loans. When the Fed raises that rate, it can help keep a lid on inflation by trying to slow the overall economy and undercutting prices for stocks and other investments.

The Fed’s new chairman, Kevin Warsh, is set to deliver a speech on Friday at an economic symposium in Jackson Hole, Wyoming. The mountain setting has provided the backdrop for major Fed policy announcements in the past, but investors are unsure of what they may get from Warsh this time around.

Warsh has insisted that he wants to give financial markets fewer clues about what the Fed will do with interest rates, hoping that markets react more to incoming data about the economy and inflation than to what the Fed is signaling.

Helping to curb some of the worries on inflation Monday was a drop in oil prices. Brent crude fell 1.3% to $91.51 per barrel.

Last month it zigzagged between $72 and $102 as hopes rose and fell that the United States and Iran could reach a deal that would allow oil tankers to freely exit the Persian Gulf again.

In stock markets abroad, indexes dipped around much of the world. South Korea’s Kospi fell 3.1%, and Hong Kong’s Hang Seng dropped 1.9% for two of the biggest moves.

Seoul has been home to some of the world’s sharpest swings this summer because it is dominated by two tech titans benefiting from the AI boom, Samsung Electronics and SK Hynix.

AP Business Writers Michelle Chapman and Elaine Kurtenbach contributed to this report.

Options traders work on the floor of the New York Stock Exchange in New York, Friday, Aug. 21, 2026. (AP Photo/Yuki Iwamura)

Specialists Dilip Patel, right, and Dylan Halvorsen work on the floor of the New York Stock Exchange in New York, Friday, Aug. 21, 2026. (AP Photo/Yuki Iwamura)

A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Thursday, Aug. 20, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

Currency traders work at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 21, 2026. (AP Photo/Ahn Young-joon)

People stand in front of an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Aug. 24, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

A person walks by an electronic stock board showing Japan's Nikkei index at a securities firm Monday, Aug. 24, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

A surveyor works in front of a stock market chart Monday, Aug. 24, 2026 in Tokyo. (AP Photo/Eugene Hoshiko)