Iran faces a dual crisis amid a devaluation of its currency and the loss of a key regional ally

Iran is facing its worst crises in years, dealing with an unprecedented geopolitical and military blow to its power in the Middle East and a spiraling economy.

According to the Reuters agency, over the weekend, the Iranian currency rial reached a record high of 756,000 dollars. The currency, which has been struggling since September, has been hit by Iran’s proxies, including Lebanon’s Hezbollah and the Palestinian militant group Hamas, as well as the devastating effects of Donald Trump’s election to the US presidency in November.

Tehran lost its most important ally in the Middle East with the overthrow of Syrian President Bashar al-Assad amid a shock attack by rebel groups. Accused of war crimes against his own people, Assad fled to Russia, leaving behind a deeply divided country.

“Toppling Assad has existential implications for the Islamic Republic,” Behnam Ben Taleblu, a senior fellow at the Washington-based Foundation for Defense of Democracies, told CNBC. “Let’s not forget that the regime spent more than a decade of treasure, blood and reputation to save a regime that collapsed in less than two weeks.”

The exchange rate plunge reveals the extent of the difficulties faced by ordinary Iranians, who struggle to afford everyday goods and suffer from high inflation and unemployment after years of heavy Western sanctions combined with domestic corruption and deteriorating economic governance.

Trump has vowed to get tough on Iran and will return to the White House nearly six years after he unilaterally pulled the United States out of the Iran nuclear deal and reimposed sweeping sanctions on the country.

Iranian President Masoud Pezeshkian has said he is willing to negotiate and reinstate the deal, formally known as the Joint Comprehensive Plan of Action, which lifts some sanctions against Iran in exchange for curbs on his government’s nuclear program. But the efforts come as the International Atomic Energy Agency says Tehran has enriched uranium to a record level, reaching 60% purity — a technical step short of the weapons-grade level of 90%.