Iran’s financial markets slipped into an unusual lull as geopolitical tensions intensified following the US and Israeli military strikes on the country, with traders reporting sharply reduced activity and widening gaps between quoted and realisable prices.

Many trading venues are either shut or operating only partially, leaving markets thin and price discovery increasingly difficult. In the foreign exchange market, in particular, two rival dollar benchmarks are circulating, each reflecting a different slice of reality in an economy gripped by uncertainty.

One widely watched indicator is the price of tether (USDT) on online exchanges, which hovered around IRR1,550,000 per dollar on March 8.

In recent years, the dollar-pegged cryptocurrency has evolved into an informal barometer of currency sentiment because it can be traded online even when the physical market stalls. Yet traders say the headline numbers mask the near-freeze in real transactions.

“Prices are there on the screen, but very little actually changes hands,” said a small-scale currency dealer near Tehran’s Ferdowsi Square, the capital’s traditional FX hub. “Everyone is cautious. People would rather wait than take a position in the middle of a war,” one person told Donyay-e Eqtesad.  

Others echo the sentiment. “In normal times, the tether price quickly feeds into the street market,” said a Tehran importer of electronics components. “Now there is a gap. You see a price online, but if you want real dollars in cash, the terms are different.”

Indeed, field reports suggest that sellers of physical dollars must currently accept around IRR100,000 below the tether rate to secure a deal, an indication that online quotes do not necessarily represent genuine demand in the physical market.

Against this backdrop, some analysts argue that a second benchmark, the dollar remittance rate at the Iran Centre for Exchange of Currency and Gold (ICE), may offer a more reliable gauge for now. Official data puts the remittance rate at around IRR 1,400,000 per dollar.

Although transaction volumes at the centre have also shrunk sharply, the platform’s regulated framework and recorded trades provide what some economists see as a firmer reference point.

“In the current climate, the remittance rate shows actual registered deals, even if volumes are minimal,” Hamid Saberi, a Tehran-based money changer, said. “It may therefore give a more realistic picture of where the market truly stands.”

More broadly, the currency market appears to have entered a phase of waiting and caution. Political risk, curtailed trading activity and tighter currency flows mean prices are increasingly shaped by sentiment rather than clear supply-and-demand dynamics. Until geopolitical conditions stabilise, traders expect low turnover and multiple competing exchange rates to persist.

Tehran gold market posts ‘red Saturday’

The Tehran gold market opened on March 7 with a broad sell-off across Tehran’s gold and coin markets, despite a strong rise in international bullion prices.

Global gold climbed $64 to $5,172 per ounce, according to market data, yet domestic prices moved sharply in the opposite direction.

The price of 18-carat gold fell IRR2.7mn to IRR187.68mn per gram, while 24-carat gold dropped IRR37mn to about IRR250mn. Meanwhile, a mithqal of 17-carat gold, a traditional trading unit in Iran, tumbled IRR12mn to IRR813mn.

Losses were even steeper in the coin market, particularly among larger denominations.

The new-design Bahar-e Azadi gold coin slid IRR35mn to IRR1.89bn, while the older design lost IRR30mn, settling near IRR1.86bn. A half coin dropped IRR15mn to IRR1.01bn, and the Central Bank’s one-gram coin fell IRR5mn to IRR275mn.

Only the quarter coin bucked the trend, remaining unchanged at IRR545mn. Traders say the declines reflect the same paralysis gripping the currency market.

“People are not buying gold for speculation right now,” said a jewellery shop owner in Tehran’s Grand Bazaar Hamid Jalali. “Everyone is watching the political situation first. When uncertainty rises, liquidity disappears.”