While the US dollar reached a new high against Iran’s currency on Wednesday, an economist warned that without an agreement with Washington soon, inflation could climb above 40% before the Iranian New Year in March.

Macroeconomist Morteza Afqah told Tehran’s Khabar Online news website on Wednesday that “If no agreement is reached, the likelihood of reinstating the ‘maximum pressure’ policy against Iran is high.

"Inflation could surpass 40% by the end of the year. Without the lifting of sanctions, the country appears incapable of managing the economy sustainably.”

Iran’s currency, the rial, has depreciated nearly 20-fold since 2018, when President Donald Trump first imposed "maximum pressure" sanctions on the country. Since September alone, the rial has lost an additional 30% of its value.

The current annual inflation rate is unclear, but official figures have hovered around 40% since 2019, with prices for food and other essentials rising at an even faster pace.

The rial was trading at nearly 800,000 per US dollar on Wednesday and over one million per British pound.

Supreme Leader Ali Khamenei’s administrative chief cleric Mohammad Mohammadi Golpaygani conceded on Wednesday that “We are not in a normal situation in the country. For years, we have been burdened by sanctions, facing difficulties in exporting oil.”

However, he added, “In these circumstances, the nation's power comes with its own challenges. After all, being a Muslim nation has its costs and is not something achieved easily.”

Afqah, in turn, expressed deep pessimism about the economy overall, seeing no reason to be optimistic.

"The short- and even medium-term outlook for our country’s economy is not promising. There isn’t much hopeful news or any so-called good news to cling to. Each individual economic and even non-economic factor is structured in a way that leads to rising costs, higher inflation, and a decline in economic growth rates," he said.

The pressure on Iran’s Islamic government is not just economic but also geopolitical, after its key non-state allies, Hamas and Hezbollah were seriously weakened by Israeli blows earlier this year, followed by the fall of President Bashar al-Assad in Syria.

Iran had invested tens of billions of dollars in keeping Assad in power against his domestic opponents, but in a matter of days, the armed opposition swept through the country, capturing Damascus and deposing the long-serving authoritarian president, who fled to Russia.

The incoming Trump administration has signaled that it is inclined to increase the pressure, not just to rein in Tehran’s nuclear program, but more likely to inhibit its power projections throughout the Middle East.