Anger, fear and defiance in Iran as US sanctions return

Iranians voiced anger, fear and defiance today as the US reimposed sanctions and their leaders dismissed President Donald Trump's offer of talks as an act of "psychological warfare".

Trump's withdrawal from a landmark 2015 nuclear agreement in May had already spooked investors and triggered a run on the Iranian rial long before nuclear-related sanctions went back into force.

"I feel like my life is being destroyed. Sanctions are already badly affecting people's lives. I can't afford to buy food, pay the rent..." said a construction worker on the streets of the capital.

The sanctions reimposed today -- targeting access to US banknotes and key industries such as cars and carpets -- were unlikely to cause immediate economic turmoil.

Iran's markets were actually relatively buoyant, with the rial strengthening by 20 per cent since Sunday after the government relaxed foreign exchange rules and allowed unlimited, tax-free gold and currency imports.

But a second tranche to return to effect on November 5 covering Iran's vital oil sector, could be far more damaging -- even if several key customers such as China, India and Turkey have refused to significantly cut their purchases.

In a statement yesterday just hours before the sanctions went back into effect, Trump said: "The Iranian regime faces a choice.

"Either change its threatening, destabilising behaviour and reintegrate with the global economy, or continue down a path of economic isolation.

"I remain open to reaching a more comprehensive deal that addresses the full range of the regime's malign activities, including its ballistic missile programme and its support for terrorism," Trump said.

But his Iranian counterpart Hassan Rouhani dismissed the idea of talks while crippling sanctions were in effect.

"If you're an enemy and you stab the other person with a knife, and then you say you want negotiations, then the first thing you have to do is remove the knife," he told state television.

"They want to launch psychological warfare against the Iranian nation," Rouhani said. "Negotiations with sanctions doesn't make sense."