United States Treasury Secretary Scott Bessent has said Washington deliberately created a “dollar shortage” in Iran – a move he claims sent the Iranian rial into freefall and contributed to nationwide protests.
The admission, made during a Congressional hearing and reiterated in recent public appearances, sheds light on how the US has operationalised President Donald Trump’s renewed “maximum pressure” strategy against Tehran.
How Did a ‘Dollar Shortage’ Happen?
A “dollar shortage” occurs when a country lacks sufficient US dollars — the dominant global trade currency — to finance imports, service foreign debt, or stabilise its exchange rate. In Iran’s case, economists say Washington simultaneously squeezed the two primary channels through which Tehran earns foreign currency: oil exports and access to international banking.
Mohammad Reza Farzanegan, an economist at Germany’s Marburg University, told Al Jazeera that the US engineered the shortage by tightening sanctions on Iran’s oil supply chain and isolating its banking sector. “By using secondary sanctions to threaten any global entity trading in dollars with Iran, the US traps Iran’s existing reserves abroad and prevents new dollars from entering the domestic market,” Farzanegan said.
Sanctions targeting oil exports — Iran’s principal source of foreign exchange — sharply reduced inflows. Meanwhile, restrictions on financial transactions blocked Tehran’s access to overseas reserves and international payment systems.
What Did Scott Bessent Say?
Responding to lawmakers last week, Bessent described what he framed as a calculated economic strategy.
“What we [have done] at Treasury is created a dollar shortage in the country,” Bessent said, adding that the strategy came to a “grand culmination in December, when one of the largest banks in Iran went under … the Iranian currency went into freefall, inflation exploded, and hence, we have seen the Iranian people out on the street.”
He added: “We have seen the Iranian leadership wiring money out of the country like crazy. So the rats are leaving the ship, and that is a good sign that they know the end may be near.”
Earlier, speaking to Fox News at the World Economic Forum in Davos, Bessent said: “President Trump ordered Treasury … to put maximum pressure on Iran, and it’s worked. Because in December, their economy collapsed. They are not able to get imports, and this is why the people took to the streets.”
Economic Fallout Inside Iran
The Iranian rial plunged dramatically — trading at nearly 1.5 million to the dollar in January, compared to around 700,000 a year earlier. The currency collapse triggered spiralling inflation, with food prices reportedly averaging 72% higher than the previous year.
In late December, shopkeepers in Tehran shuttered businesses as protests erupted over soaring prices. Demonstrations spread across provinces, prompting a forceful crackdown by the government of Supreme Leader Ayatollah Ali Khamenei. According to reports cited by Al Jazeera, more than 6,800 protesters, including at least 150 children, are believed to have been killed in the crackdown.
Farzanegan said the impact of the dollar squeeze went beyond exchange rates.
“Through the rigorous blocking of Iran from the global financial system by creating a dollar shortage, the US pushed Tehran towards a severe ‘import compression, [and as a result, Iran] cannot pay for the intermediate goods and machinery required for domestic production’.”
He added that the strategy “leverages commercial risk management against humanitarian needs,” making even medicine-related transactions commercially risky for foreign companies.
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