Iranian rial hits record low as central bank intervenes with $2 billion injection

The Iranian rial has plunged to a new record low, forcing the country's central bank to step in with a massive $2 billion intervention to prop up the crashing currency.

On Saturday, the US dollar was trading at an unprecedented 2.688 million rials on the open-market tracking website bon-bast.com. That was up from 2.632 million rials just a day earlier. Another prominent exchange tracking site, alanchand.com, recorded an even weaker rate of 2.695 million rials per dollar, illustrating the speed of the currency's decline.

With the rial losing more than half of its value over the past year, state television confirmed that state-run banks had begun selling up to $2 billion in foreign reserves to inject liquidity into the market and arrest the slide.

Why the Iranian rial is crashing

The immediate trigger for this latest sell-off is a combination of heavy US economic sanctions and a naval blockade that has successfully choked off Iran's oil exports. Oil is the state's main financial lifeline, and without it, the central bank's ability to pull in hard currency has been severely restricted.

For ordinary Iranians, the macroeconomic crisis has translated into a harsh daily struggle. Inflation in the country has now surpassed 70 per cent. This has made basic necessities, food, and rent increasingly unaffordable for households whose wages have failed to keep pace with the soaring cost of living.

To protect what remains of their savings, citizens have been rushing to dump their rials. Many are buying US dollars, other foreign currencies, or gold, creating a self-reinforcing cycle of high demand for foreign currency that pushes the rial even lower.

What the government is saying

Iranian officials have sought to downplay the crisis, attributing the panic to foreign psychological warfare rather than structural economic failure.

Mehdi Darabi, an aide to the central bank governor on foreign exchange affairs, blamed the currency's slide on Washington. Speaking on state television, he argued that US officials were intentionally spreading rumours about an imminent economic collapse to destabilise the Iranian market.

"It is suggested that the Iranian economy is about to crash," Darabi said. "The enemy is using this to affect the exchange rate of our currency." He insisted that the current drop in the rial's value is temporary and that the central bank's intervention would restore order.

However, previous attempts by the central bank to defend the rial through reserve injections have yielded only short-term relief. Without a diplomatic breakthrough to lift the sanctions or end the naval blockade, economists warn that the fundamental imbalance between Iran's supply of dollars and its citizens' demand for them will continue to put pressure on the currency.