Iran currency market faces extreme volatility amid US sanctions

The Iranian currency market is experiencing extreme volatility, with the US dollar reaching peaks above 230,000 tomans before seeing some corrections. This instability is driven by heightened uncertainty regarding political and military developments, as well as new economic sanctions announced by the US Department of the Treasury. US Treasury Secretary Scott Bessent has indicated that Washington intends to implement an ‘economic expulsion operation’ to isolate the Iranian economy, targeting banks and potentially the aviation and shipping sectors.

In response to the currency fluctuations, the Central Bank of Iran has attempted to intervene in the market to absorb liquidity. Despite assurances from Central Bank Governor Abdolnaser Hemmati that the country possesses sufficient foreign exchange reserves, the market continues to react sharply to news of sanctions and potential disruptions in remittance routes through Turkey and Dubai.

The economic instability is also impacting the cost of living and essential services. Rising exchange rates have contributed to significant inflation, affecting the prices of gold, coins, and medicines. Lawmakers have raised concerns regarding the shortage of raw materials for pharmaceuticals and the inability of insurance providers to cover the increasing costs of medical supplies, warning of potential long-term consequences for the national healthcare system.