Iran blames US sanctions as riyal plunges to record low against dollar

TEHRAN, Sep 1: Iran's government on Tuesday blamed US sanctions for the sharp fall in the rial, as the currency weakened to around 2.1 million rials per US dollar, while the central bank said it was prepared to inject up to $2 billion into the foreign exchange market to stabilize it.

Government spokesperson Fatemeh Mohajerani said the exchange rate reflected the impact of US pressure and sanctions. “The dollar reaching 2.1 million riyals is the result of US pressure and sanctions, and we do not deny this pressure,” she said, adding that sanctions imposed by Washington under pressure from Israel had increased economic difficulties.

Central Bank Governor Abdolnaser Hemmati said Iran had sufficient foreign currency to continue paying for essential imports and had several sources of foreign exchange, including oil and non-oil export revenues and reserves not frozen by sanctions.

Hemmati said more than $18 billion had been supplied since the start of the Iranian year on March 21 to finance imports of food, medicine, animal feed and industrial raw materials. The central bank also injected $500 million into the foreign exchange market last week.

“I officially announce that the central bank is ready, if necessary, to inject up to $2 billion in foreign currency to manage and stabilize the market,” Hemmati said.

He acknowledged that sanctions and the economic impact of the war had made daily life more difficult but rejected warnings of an economic collapse. Hemmati said the central bank was focused on slowing inflation through monetary policy and tighter oversight.

Iran's rial fell below 2 million to the dollar in August, reaching a record low, while annual inflation stood at 66% in July, adding to pressure on households and businesses.