The Iranian rial has plunged past the 2 million per US dollar mark in August for the first time ever, while annual inflation soared to 66% in July. Faced with the dual pressure of a collapsing currency and runaway prices, Iran's central bank is preparing to inject up to $2 billion into the foreign exchange market to curb the sharp fluctuations of its national currency.

Central bank governor Abdolnaser Hemmati said on Tuesday that Tehran holds ample foreign exchange reserves and that the bank is ready to inject as much as $2 billion into the currency market to calm recent volatility in the rial. His remarks came as the rial broke through the psychological threshold of 2 million per dollar this month and as year-on-year inflation hit 66% in July. Reuters noted that after several Iranian officials, including President Masoud Pezeshkian, recently highlighted the growing economic difficulties facing the country, the governor's comments "seemed partly aimed at reassuring the market."

Running parallel to the central bank's market intervention is Washington's escalating economic pressure. US Treasury Secretary Bessent warned that countries doing business with Iran could face American sanctions, saying secondary sanctions "could be rolled out weekly" with an initial focus on banks. The six-month-long conflict is increasingly being fought through sanctions, blockades, and economic leverage.

Rial breaks through 2 million, inflation climbs to 66%

The depreciation pressure on the rial has persisted for months. In August, Iran's currency hit a historic low against the dollar, breaking through the psychological level of 2 million rials per dollar, while annual inflation rose to 66% in July. Several Iranian officials, including President Pezeshkian, have repeatedly pointed to the intensifying economic difficulties facing the country in recent remarks.

This situation unfolds against a backdrop where the US-Iran conflict has shifted toward economic confrontation. The memorandum of understanding (MOU) signed by both sides in June declared an end to hostilities but quickly unraveled, and the subsequent 60-day negotiation period has passed without a further agreement. Reports suggest Washington increasingly relies on economic pressure to force Tehran to halt the blockade of the Strait of Hormuz and end the conflict.

Central bank chief dismisses collapse narrative as psychological warfare

Confronted with currency depreciation and runaway prices, Iran's central bank has chosen to step in directly. Governor Hemmati said Tuesday that Tehran possesses sufficient foreign exchange reserves, citing his remarks via semi-official news agency Tasnim that the bank is ready to pump up to $2 billion into the currency market to calm recent volatility.

Hemmati also made a rare direct appeal to Washington: "I tell the American president: Iran has foreign currency, and it is enough." He stated that the central bank is continuously collecting foreign exchange receivables and holds domestic reserves and other resources, though he did not disclose specifics. "I tell the public with complete honesty that the economic situation and livelihood management have indeed become difficult," Hemmati said. "But the country has never collapsed and will never collapse. These claims are nothing but psychological warfare. Everything will soon settle down." Media commentary suggests that after Iranian officials repeatedly highlighted economic struggles, this statement "appears partly designed to reassure the market."

Exchange of fire and sanctions run in parallel, with divergent stances among parties

The central bank's rescue measures coincide with military and economic maneuvering on both the US and Iranian sides. Iranian President Pezeshkian stated clearly at the Shanghai Cooperation Organization summit in Bishkek, Kyrgyzstan: "If the United States returns to its commitments under the MOU, Iran will respond immediately and reciprocally." He also said Monday that war serves no one's interests and that Tehran remains open to a negotiated solution.

However, a source close to Iran's leadership told media that the current round of exchanges of fire is a "limited and controlled confrontation," while adding that Tehran would respond harshly if attacked again. On the US side, President Trump told Fox News, "We will hit them hard... there will be a response," before telling reporters that the recent strikes do not signal a return to full-scale war.

Oil markets remain sensitive to the situation. On Monday evening, two very large crude carriers carrying Saudi crude were struck by unidentified projectiles while departing the Strait of Hormuz. Brent crude futures rose another 1.3% on Tuesday. PVM analyst John Evans commented that the tit-for-tat missile exchanges between Washington and Tehran confirm the view held by those who believe that "even if this is not a 'permanent war,' the conflict will be prolonged."