US Secretary of State Hillary Clinton held out the possibility on Wednesday that sanctions on Iran could be eased quickly if Tehran worked with major powers to address questions about its nuclear program.
Speaking to reporters about protests in Iran triggered by the collapse of the Iranian currency, which has lost 40 percent of its value against the dollar in a week, Clinton blamed the Iranian government - rather than Western sanctions - for the financial troubles.
The United States and its allies accuse Iran of using its atomic program as a cover to develop nuclear weapons and have imposed increasingly stringent economic sanctions to try to force Iran to answer questions about the program. Iran has said its program is for solely peaceful purposes, not for weapons.
Panicking Iranians have scrambled to buy hard currency, pushing down the rial, whose increasing weakness is hurting living standards and threatening jobs. Furthermore, protests have reportedly spread to Iran's northwestern city of Mashhad, according to Al Arabiya.
Initially, the protests were confined to Tehran as Iranian riot police clashed with demonstrators and foreign exchange dealers over the collapse of the country's currency.
"They have made their own government decisions - having nothing to do with the sanctions - that have had an impact on the economic conditions inside of the country," Clinton told reporters when asked about the protests.
"Of course the sanctions have had an impact as well, but those could be remedied in short order if the Iranian government were willing to work with the P5+1 and the rest of the international community in a sincere manner," she added, referring to a group that includes the five permanent members of the UN Security Council - Britain, China, France, Russia and the United States - as well as Germany.
While the rial's slide suggested the Western sanctions were having a serious impact, many businessmen and ordinary citizens say the government is at least partly to blame for the currency crisis.
The rial's losses accelerated in the past week after the government launched an "exchange center" to supply dollars to importers of basic goods. Businessmen say the center failed to meet demand for dollars.