The regime is injecting billions of dollars into the market as the rial loses value at an accelerating pace, but structural economic weaknesses remain unresolved
Iran’s rial has continued its dramatic decline, raising fresh questions about whether the regime can stabilize the currency through short-term injections of foreign exchange or whether the crisis reflects deeper structural failures in the economy.
By late September, the free-market dollar had climbed above 2.5 million rials, setting successive records. The currency had already crossed the 2 million-rial threshold in August. The rapid depreciation has translated directly into higher costs for imported goods, medicine, raw materials, housing, and other basic necessities.
Against this backdrop, the Central Bank of Iran has turned once again to foreign-exchange intervention. Central Bank Governor Abdolnaser Hemmati said in early September that the bank was prepared to inject up to $2 billion into the market, after having already supplied $500 million.
The intervention, however, has done little to reverse the underlying trend.
Foreign-exchange injections offer only temporary relief
The regime has repeatedly attempted to stabilize the rial by increasing the supply of foreign currency. The rationale is straightforward: if demand for dollars is pushing the exchange rate higher, supplying more dollars should reduce pressure on the market.
But this approach addresses the symptom rather than the underlying causes of the currency crisis.
Iran’s Central Bank itself has acknowledged that the pressure on the foreign-exchange market cannot simply be explained by a physical shortage of dollars. Hemmati has pointed to precautionary demand, speculation, and capital flight as important factors behind the pressure on the rial.
This distinction is crucial. If households, businesses, and investors are buying foreign currency because they expect the rial to lose further value, temporarily increasing the supply of dollars does not eliminate the reasons behind that behavior.
Instead, it can consume scarce foreign-exchange resources while postponing the next wave of depreciation.
The scale of the problem is illustrated by the currency’s trajectory. The dollar had been trading at roughly 130,000 tomans at the beginning of September, according to the figures cited in the discussion, before surging above 250,000 tomans later in the month. Independent reporting confirmed that the free-market dollar surpassed 2.5 million rials on September 29.
The rial crisis is bigger than the dollar
The exchange rate has effectively become one of the clearest indicators of Iran’s broader economic deterioration.
A falling currency increases the cost of virtually everything dependent on imports or imported inputs. Businesses must pay more for machinery, raw materials, medicine, and other necessities, while consumers face higher prices for finished products.
The result is a feedback loop:
Rial depreciation → higher import costs → higher domestic prices → falling purchasing power → greater demand for foreign currency → further pressure on the rial.
Breaking that cycle requires more than selling dollars into the market.
Iran’s inflationary environment makes the problem even more difficult. The Central Bank reported point-to-point inflation of 83.8 percent for September, only slightly below the 84.4 percent recorded in August.
In such an environment, foreign currency and gold increasingly become stores of value for households seeking to protect their savings from further depreciation.
A structural economic problem
The analysis presented in the discussion attributes the persistent weakness of the rial to structural characteristics of Iran’s economy rather than simply a temporary shortage of foreign exchange.
Among the central problems is the regime’s chronic budget deficit.
When government spending consistently exceeds revenues, authorities face pressure to finance the gap. Monetary expansion without a corresponding increase in production adds to the money supply while the supply of goods and services fails to keep pace.
That combination contributes to inflation and, over time, undermines confidence in the national currency.
The problem is compounded by an economy heavily affected by sanctions, restrictions on international financial transactions, disruptions to trade, and the concentration of significant economic activity in institutions connected to the regime’s security establishment.
Recent reporting also shows how constrained Iran’s access to the international financial system has become. The UAE barred Bank Melli from operating in the country in September, citing regulatory violations involving anti-money-laundering, terrorist-financing, and proliferation-financing rules.
Meanwhile, Iran has increasingly turned to alternative financial channels, including cryptocurrencies, to facilitate cross-border transactions under sanctions.
These developments illustrate the broader environment in which the rial is operating: limited access to international finance, severe external pressure, and deep domestic monetary and fiscal problems.
Why repeated intervention cannot solve the crisis
The regime can inject dollars into the market. It can announce new exchange-rate measures. It can restrict transactions or attempt to discourage speculation.
But none of these measures automatically restores confidence in the rial.
The Central Bank itself has attempted to reassure the public that Iran possesses sufficient foreign-currency resources. In September, Hemmati said the bank had access to oil and non-oil export revenues and other reserves, while also saying that details of some resources could not be disclosed.
Yet the continuing depreciation demonstrates the limits of that reassurance.
A central bank can intervene against market pressure for a period of time, but sustained intervention requires sufficient resources and credible economic policies. If underlying inflation remains high and economic actors continue to expect further depreciation, intervention becomes increasingly expensive and progressively less effective.
This is why the debate over whether the regime can inject another $1 billion, $2 billion, or $3 billion misses the central issue.
The question is not simply how many dollars the Central Bank can sell.
The question is why people are trying to get rid of their rials in the first place.
The social cost of currency collapse
For ordinary Iranians, the currency crisis is not an abstract financial-market story.
When the rial loses half its purchasing power over a relatively short period, wages effectively shrink even if their nominal amount remains unchanged. Savings lose value. Food and medicine become more expensive. Families postpone education and healthcare expenses, while workers and retirees struggle to keep up with rapidly rising prices.
The deterioration also fuels broader public frustration over economic inequality, corruption, and government spending priorities.
The result is an increasingly difficult environment for a regime already concerned about social stability.
The rial’s collapse therefore represents more than a currency-market problem. It is a manifestation of the deeper economic pressures confronting Iran’s regime.
Foreign-exchange intervention may temporarily slow the fall. It cannot, by itself, reverse the monetary, fiscal, institutional, and structural factors that have steadily eroded confidence in the national currency.
As long as those factors remain unresolved, every new dollar injection risks becoming another temporary attempt to contain a crisis that continues to deepen beneath the surface.