The Iranian rial has hit new lows in the wake of Bashar al-Assad’s fall in Syria, in a sign that the ouster of Tehran's main Arab ally may be hollowing out economic confidence.

The dollar was trading at more than 730,000 rials in Tehran’s free exchange market on Tuesday, up from 700,000 just a week ago.

The downfall of Assad, whose ruling family has been the one of the Islamic Republic's earliest and strongest allies since 1979, severs Iran's land corridor to Lebanon which supplied weapons to Hezbollah for its periodic confrontations with Israel.

The slide adds to Iran’s vulnerabilities and could indicate its relative weakness in the region.

In addition to recent regional setbacks, the Islamic Republic faces the imminent challenge of Donald Trump assuming office in the United States, who will likely ramp up economic pressure on Tehran.

The euro was trading at almost 770,000 rials, as most other hard currencies rose in tandem with the US dollar in Tehran. The rial has fallen 18-fold since 2018, when the United States withdrew from the JCPOA nuclear deal and imposed sanctions on Tehran.

Before the establishment of the Islamic government in 1979, the US dollar was worth just 70 rials.

The rial’s steady decline signals further price hikes in Iran as imports grow more expensive, with inflation already nearing 50 percent. Meanwhile, oil exports constrained by sanctions have fail to generate sufficient foreign currency to stabilize the rial.

The only recourse for Tehran is to convince the US to lift its economic sanctions, but so far, Iran has not made sufficient concessions on its ambitious nuclear program or its regional policies to sway Washington.