Raheb Homavandi / Reuters file
A money changer holds Iranian rial banknotes as he waits for customers in Tehran's business district in this January 7, 2012 file photo.
By Ali Arouzi, NBC News correspondent
TEHRAN ? Even though threats of war with Israel are almost a daily occurrence, what?s really on people's minds in this city is the economy.
The United States, the European Union and the U.N. have imposed tough economic sanctions against Iran, blocking access to the international banking system and curbing sales of Iranian crude oil as a way to persuade Tehran to abandon its nuclear program.
As a result, Iran?s currency, the rial, is in a constant state of flux, but mostly on a downward trajectory. These days, it seems to fall in value against the dollar on an hourly basis. On Tuesday the currency hit an all-time low against the U.S. dollar, trading at 26,500 to the U.S. dollar on the open market, according to Persian-language currency tracking website Mazanex.?
?Our money is becoming more and more worthless every day,? said Sarvenas Sadi, an elderly woman doing her daily shopping in Tehran earlier this week.
She picked up a handful of limes and exclaimed, ?These were 100 percent cheaper last year!?
Asked whether she ever thought she would see the currency devalue so much, she replied, ?Never! I remember before the [1979] revolution $1 was worth 70 rial, now it?s worth 26,000! Who would have ever have thought!?
Iranians feel the pain of sanctions: 'Everything has doubled in price'
Did she think things would ever balance out and the price of goods would come down to what they were before. ?Unfortunately I don?t think so. The thing with Iran is that once the price of something goes up, it never comes down again.?
So what?s the solution?? ?Eat less limes,? she jokingly replied.?
AP
Two potential Iranian customers look at fabric bolts in Tehran's old main bazaar in this picture taken July 14, 2012.
Manufacturing hit hard
The financial situation is affecting people from all classes. Thousands of workers have been laid off and have not been paid back wages because companies have simply run out of money. Majid, a 32-year-old mechanic who used to work for a large car company was recently laid off and is owed six months? salary.
?They are laying off people left, right and center. I doubt there will be a company left by the New Year,? he said, giving just his first name because of the sensitivity of the issue in Iran. Persian New Year will be on March 21, 2013.
The car industry, one of the biggest manufacturing sectors in Iran and a massive employer, has been affected dramatically; Iranian media have reported a 30 to 50 percent drop in car and component production in the past six months. Iran was the 13th-largest auto maker in the world in 2011, producing 1.6 million vehicles.
The Iran Khodro Company, the country?s leading vehicle manufacturer, had become the largest vehicle manufacturer in the Middle East,?Central Asia?and North Africa. ?The company won the annual national prize for export activities in 2006 and 2007 with Russia, Syria, Turkey, Iraq, Azerbaijan, Ukraine, Egypt, Algeria and Bulgaria among their key consumers.
But higher prices, due to the soaring costs of components as a result of the sanctions, have caused a drop in demand.
Israel's Netanyahu: Draw 'clear red line' to stop Iran from getting nuclear weapons
For instance, France's Peugeot Citroen halted shipments of vehicle kits for assembly in Iran earlier this year, saying international sanctions barring transactions with the country's banking system made it difficult to obtain sales financing.
Sanctions have taken a toll on the Iranian economy. The government is reluctant to admit it. Inflation is high. The number of young unemployed is a growing concern. NBC's Ali Arouzi reports.?
Majid, the mechanic, said he is looking for work elsewhere but it is proving very difficult. ?There are not many jobs going and it is getting me more and more depressed.?
Oil sales to travel - down
The oil sector has been hit hard too.? The Iranian Labor News Agency reported that a letter on behalf of 20,000 oil workers from across the country was sent to Labor Minister Abdolreza Sheikholeslami complaining that they had not been paid in months. The letter demanded an increase to the worker?s salaries of $120 to $285 a month, adding that at the current rate they were "way below the poverty line.??
Mohammad Reza Bahonar, a prominent Iranian member of parliament, said oil exports in June-July had dropped to "around 800,000 barrels per day," according to a report by ISNA news agency. That?s a low not seen in more than two decades, and less than half the 2.3 million barrels per day exported just a year ago.
But Minister of Petroleum Rostam Qasemi was quoted by ISNA saying that overall oil production this year "will be the same as last year."
Israel's Prime Minister Benjamin Netanyahu called for a firm deadline for Iran to halt its nuclear program, using a simple drawing to warn the UN that Iran will soon reach the point of no return in its development of nuclear weapons. NBC's Andrea Mitchell reports.
The strangling of the economy isn?t just affecting blue-collar workers.
Middle-class Iranians had become accustomed to foreign travel ? to Dubai, a playground for Iranians only an hour and half away, Turkey, one of only a few countries that does not require visa?s for Iranians, and Thailand. But the cost of travel to any of these destinations is prohibitive to many.
More Iran coverage from NBC News
Maryam, a travel agent in Tehran who also only gave her first name, estimated that the number of travelers has been halved in a year. ?The price of tickets and organized tours increased almost a hundred fold. They say that this will boost domestic holidays, but I think that is even too expensive for most people.?
This was evident to me last month flying back to Tehran from London via Dubai. Usually the flight from Dubai to Tehran is jammed, but not this time. Business and first class were full with the super-rich of Iran, but 70 percent of the plane which makes up the economy class was almost empty.
As the American mission in Afghanistan winds down, dangers still abound for U.S. troops ? the most recent incident involved a Taliban gunman who fired on a U.S. Marine outpost in Afghanistan's Helmand Province. NBC's Richard Engel reports.
Expected to get worse
Mehdi is a young entrepreneur who imports computers and accessories who also spoke on the condition of anonymity. He said people are just not buying in Iran right now. His biggest wish was that the value of the rial would just stay fixed against dollar ? even if it was at an unfavorable rate ? just so consumers would know how much things would cost in a weeks? time, a day or even in the next few hours.
While the sanctions have certainly taken a major bite out of the economy and are hurting people from all walks of life ? it does not seem to be making the government authorities buckle. If anything it seems to have stiffened the government?s resolve and things are set to become even more difficult in the not too distant future. ?
Britain, France and Germany are urging their European Union partners "to further step up the pressure" on Iran. Further sanctions targeting the Islamic Republic's energy, finance, trade and transportation sectors are expected to be formally adopted on Oct. 15.
At schools, in shops, and on the streets of big cities and small towns, daily life plays out in Iran.
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