Iran rial plunges to new lows amid unrest, international isolation

DUBAI (Reuters) - Iran's currency fell to a record low against the U.S. dollar on the unofficial market on Sunday, amid the country's increasing isolation over its disputed nuclear programme, human rights violations and the supply of drones to Russia.

The U.S. dollar was fetching as much as 601,500 rials on Iran's unofficial market on Sunday, compared with 575,000 on the previous day and 540,000 on Friday, according to foreign exchange site Bonbast.com.

Iranian authorities have blamed the currency's fall on "the enemies' plot" to destabilise the Islamic Republic after months of unrest sparked by the death in custody of a young woman on Sept. 16.

The rial has lost nearly half of its value since the start of nationwide protests, the boldest challenge to theocratic rule since the 1979 Islamic Revolution.

With protests in the Sunni-populated areas of Iran persisting, demonstrations in other parts of the country have waned in the past few weeks amid the state's harsh crackdown on protests.

The clerical leaders fear economic misery could ignite more protests when Iran faces mounting Western pressure over issues ranging from "brutal" clampdown on unrest, its disputed nuclear programme and the war in Ukraine, where Western states say Russia has used Iranian drones.

Iran denies supplying drones to Russia for use in the Ukraine war.

The decreasing likelihood of salvaging Tehran's 2015 nuclear pact with world powers amid stalled talks since last year could also mean that crippling economic sanctions re-imposed by Washington when it ditched the pact in 2018 will continue to weigh on Iran's economy.

Faced with the prospect of further economic hardship, Iranians have been turning to dollars and other hard currencies or gold to protect their savings amid an inflation above %53 and rising prices.

To calm the market and ease demand for dollars, the central bank on Saturday lifted a ban on private exchange shops selling hard currencies.