Iran's rial has stabilised after the central bank began supplying dollars at prices closer to the open-market rate, with eight-day currency volatility dropping from 15% to 1.2% immediately before the change.
In the free market on Ferdowsi Street in downtown Tehran, the dollar fell 0.83% to IRR2.628mn on October 12, extending a pullback after recently trading above IRR2.7mn. The euro declined 1.01% to IRR2.9392mn, sterling fell 0.86% to IRR3.4787mn and the UAE dirham lost 0.76% to IRR722,900.
Volatility changed after the Central Bank of Iran decided to supply foreign currency at rates much closer to those available in the open market. Economists cited by Donya-e-Eqtesad said narrowing the price gap makes buying official dollars for resale less attractive and limits excess demand created when the CBI offers foreign currency substantially below its market value.
The figures provide the first indication that the CBI's latest intervention has slowed the extreme swings seen in late September and early October. However, they do not amount to a recovery in the rial, which remains near record lows after weakening sharply from around IRR2.3mn per dollar in September.
CBI Governor Abdolnaser Hemmati said the dollar's upward momentum had slowed following a series of central bank measures and predicted the exchange rate would decline further. He did not provide a target or timetable.
Hemmati said the CBI had supplied $25bn in foreign currency to support production since the beginning of the Iranian year on March 21. He also said it had made sufficient provision to finance imports of essential goods.
The CBI has previously said it does not intend to defend a specific exchange rate. Earlier this month, it said prevailing market rates were not fully consistent with Iran's economic fundamentals and that part of the rial's depreciation reflected uncertainty and market expectations. The bank said it would intervene when necessary to prevent non-fundamental currency movements from becoming entrenched, according to Donya-e-Eqtesad.
The latest stabilisation follows a $2bn foreign-currency intervention announced after the dollar broke through IRR2.5mn. The first $1bn was offered through selected banks and bank-affiliated exchange bureaux, while the amount individuals aged over 18 could purchase was increased from $1,000 to $10,000.
Offering dollars closer to the free-market price is a key part of that approach. Iran has long operated multiple exchange rates, and large discounts in official channels can generate demand from buyers seeking to capture the difference with the open market. Bringing the intervention price closer to the market rate reduces that incentive without requiring the CBI to defend a fixed level.
Hemmati also used the latest currency figures to respond to US Treasury Secretary Scott Bessent's comments on Iran's economy.
Bessent said on September 27 that around 15mn barrels of Iranian oil remained in transit and predicted that Iran would make its final deliveries to China within roughly two weeks, after which it would have "nothing left to trade for anything". US media subsequently presented the remarks as a prediction of imminent economic collapse.
Hemmati said October 12 marked the end of the two-week period and argued that Iran's economic position should be assessed using measurable indicators rather than political statements.
"Economic pressure is a reality that people feel," Hemmati said, while rejecting the suggestion that sanctions and political statements in themselves demonstrated economic collapse.