Dr. Sajjad Ahmad Jan
Coordinator, Development Insights Lab (DIL), University of Peshawar
In recent weeks, a noticeable trend has emerged in Pakistan: many people are buying large amounts of the Iranian currency (rial) in the hope of earning quick profits. The idea is simple—if tensions between Iran, the United States, and Israel ease, the rial will strengthen, and its price will rise sharply. However, this expectation needs to be examined carefully.
Over the past decade, the Iranian rial has become extremely weak. It has lost around 90–95% of its value against the U.S. dollar. This decline is mainly due to economic sanctions, high inflation, unstable oil exports, and a general loss of public trust in the currency. When people lose confidence in their currency, they shift to safer options like dollars or gold, which further weakens the local currency.
In contrast, countries such as Saudi Arabia and the United Arab Emirates have strong and stable currencies. Their exchange rates are linked to the U.S. dollar, they have large foreign reserves, low inflation, and relatively stable economies. This explains why the Iranian rial is much weaker compared to these regional currencies.
Despite this global weakness, the rial is being sold at unusually high prices in Pakistan. Internationally, 10 million Iranian rials are worth around Rs 1,800–2,000, but in Pakistan, people are paying Rs 7,000–10,000 for the same amount. This large gap does not reflect real value. Instead, it is driven by limited availability of rials, restrictions due to sanctions, informal trading systems like hawala, and most importantly, speculation based on rumors and expectations. In simple terms, the price in Pakistan is artificially inflated.
The main reason behind this buying behavior is the belief that the rial will return to its value from 10–12 years ago. For this to happen, Iran would need major changes: political stability, removal of sanctions, controlled inflation, strong economic growth, and restored investor confidence. In such an ideal scenario, the exchange rate could improve significantly, and 10 million rials could be worth Rs 50,000–60,000, suggesting very high profits.
However, this scenario is highly unrealistic in the short term. Economic history shows that currencies that collapse due to structural problems rarely return quickly to their previous strength. At best, they improve gradually or stabilize at weaker levels. Sometimes, governments even remove zeros from the currency rather than restoring its real value.
A more realistic scenario is moderate improvement. If the exchange rate improves to around 500,000 rials per dollar, then 10 million rials would be worth about Rs 5,000–6,000. This is still below the current prices being paid in Pakistan, meaning many buyers could face losses rather than gains.
This situation carries significant risks. Prices may fall if demand slows down, governments may act against informal trading channels, and the rial may continue to weaken. While short-term gains are possible if speculation continues, overall, the risk is higher than the potential reward.
This trend also highlights broader issues. Many people lack financial awareness and cannot distinguish between real value and market hype. The growing use of informal markets raises regulatory concerns. Moreover, global political tensions are directly influencing local financial decisions, often leading to risky behavior.
In conclusion, the rising demand for Iranian rials in Pakistan is driven more by speculation than economic fundamentals. While large profits are possible in extreme and unlikely scenarios, the current market price of the rial in Pakistan appears significantly overvalued.
Final Message: This is not a normal investment—it is a high-risk gamble based on uncertainty, expectations, and geopolitical developments. Extreme caution is strongly advised.