Washington: The United States has admitted that it deliberately created a shortage of US dollars in Iran. The move helped push the Iranian rial to record lows and triggered mass protests across the country. Treasury officials said the strategy was part of a plan to pressure Iran’s government by collapsing its economy.
The protests began in late December 2025 in Tehran, where shopkeepers closed their stores to protest rising prices. The unrest quickly spread to other cities as the Iranian currency plunged, causing inflation and a rise in the cost of daily goods. What began as local protests over basic economic survival soon spread across provinces. The government responded with a harsh crackdown, leaving thousands injured or dead.
The US dollar plays a central role in global commerce. Nations depend on it to pay for essential imports, service foreign loans and sell oil and other exports. A “dollar shortage” happens when a country cannot get enough dollars to buy goods, pay for imports or settle debts.
In Iran’s case, the US blocked the country from selling oil internationally and restricted access to global banks. This prevented dollars from entering the country. It resulted in weakening the rial and driving prices up.
Economists explained how Washington’s measures worked in practice. By imposing stringent sanctions on Iranian oil and threatening punitive action against any global entity that attempted to trade in dollars with Iran, the United States effectively cut off two primary channels through which foreign exchange entered the Iranian economy. With oil exports, which are Iran’s lifeblood, constrained and access to international banking blocked, the flow of dollars into the country slowed to a trickle and put unprecedented pressure on the rial.
When asked about the strategy during a congressional hearing, the US Treasury secretary outlined how this policy aimed at exacerbating economic stress. He described how the engineered dollar shortage culminated in the collapse of a major Iranian bank late last year, a rise in inflation and large numbers of ordinary Iranians taking to the streets.
He also said that leaders in Tehran had moved large sums of money out of the country, a sign, in his view, of fear at the top levels of power.
In comments made at a global economic forum earlier this year, he linked the pressure campaign to an order from the US president to apply “maximum pressure” on Tehran. According to the Treasury chief, the result was an economy that had virtually collapsed by December, cutting off Iran’s ability to secure basic imports and contributing to growing public unrest.
The effects on ordinary life in Iran have been severe. By January 2026, the rial had dropped to 1.5 million per US dollar, compared with 700,000 a year earlier. Inflation soared, with prices for food and basic goods rising by more than 70 percent. Experts say the US sanctions targeted Iran’s oil and financial systems so intensely that even medicine and essential imports became hard to get.
The backdrop to this economic turmoil extends back to 2018, when the United States withdrew from a landmark nuclear agreement that had eased sanctions in exchange for limits on Iran’s nuclear programme. Since his re-election last year, US President Donald Trump doubled down on a campaign to choke off Iran’s revenue flows, even threatening punitive tariffs on third countries that continued to do business with Tehran.
Experts say that the US strategy was especially devastating because it turned ordinary commercial risk into a humanitarian burden. With sanctions threatening firms that might otherwise supply medicine or machinery, even companies with purely civilian intentions began to see the Iranian market as too risky to engage with.
However, analysts stress that the dollar squeeze exposed longstanding weaknesses in Iran’s economy. Mismanagement, corruption and heavy dependence on oil revenues left the country with little room to manoeuvre when external pressures mounted. Even before the most recent sanctions, there was limited capacity within the government to cushion citizens from economic shocks.
The treasury chief has described the “dollar shortage” as a form of “economic statecraft”, a way to apply pressure without firing shots. But some observers warn that the tactic has serious diplomatic costs. By directly targeting the banking system, they say, the United States has made it harder to separate humanitarian transactions for food and medicine from punitive measures intended to squeeze Tehran.
Economic coercion of this kind is not unique to the United States. Over the decades, Washington has deployed similar tools against Russia, Cuba, North Korea, China and others. Nevertheless, Iran’s case stands out for the scale and intensity of the pressure applied, driven in part by Tehran’s long history of sanctions dating back to the revolution in 1979.
With US naval forces deployed in the Arabian Sea and diplomatic talks underway, Washington’s negotiating table includes demands that Tehran curb its nuclear ambitions, dismantle ballistic missile programmes and halt support for armed groups in the region. The broader goal, many analysts say, seems to aim for a major change in Iran’s politics.
Sanctions, however severe, rarely lead directly to regime change without the overt use of force. In Iran’s case, they stress, an economy in crisis is more likely to force ordinary people to focus on daily survival than to overthrow those in power.
As Iran faces the impact of a deliberately caused “dollar shortage”, people are suffering in their streets, homes and shops, with the economic strain seen as driven both by outside forces and internal problems.
Meanwhile, the United States has also kept its naval forces near Iran and is negotiating to curb Tehran’s nuclear programme, missile development and support for armed groups. Observers say the strategy is a form of “economic statecraft” aimed at pressuring Iran without military conflict.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: ZEE News
