Iran rial currency bill
Iran rial currency billIsrael news photo

The Iranian "rial" currency sank again Monday after the European Union slapped sanctions on oil imports, leaving the rial 80 percent below its level last month.

Iran’s semi-official Mehr news agency said that the Islamic Republic’s central bank would peg the dollar at 14,200 rials even though it takes nearly twice as many rials to buy a dollar in the street.

The rate in December was 10,700 rials to the dollar.

New sanctions, announced last month by President Barack Obama and which the European Union announced Monday it would put into effect, have crippled the local currency and threaten to throw the economy into a tailspin. Western powers are hoping economic pressure can convince Iran to halt its unsupervised nuclear development and enrichment of high-grade uranium, a key ingredient for a nuclear weapon.

Iran last month responded to the plunge by prohibiting currency trading outside of banks and official exchange offices and banning the possession of foreign currencies.

Simultaneously with the currency crisis, the price of gold has soared 25 percent in the last week.

Iran continues to act as if nothing out of the ordinary is taking place. When the rial began its plunger earlier this month, officials said there was no connection with the sanctions, and officials reacted to the EU sanctions by saying they would only harm the West.

The Ahmadinejad regime’s only retaliatory economic measure against the United States is to try to block the Strait of Hormuz, the passageway for a large amount of the world's energy supplies. Any attempt to do so would spark an immediate political and economic crisis, if not all-out war.

The United States has vowed to keep the Strait open. Its closure would cause a step hike in the price of oil in the face of dwindling supplies. However, Saudi Arabia said this week it could pump more oil to make for any loss due to an Iranian blockade.