Iran central bank chief blames rial’s downfall on ‘psychological warfare’
Iran’s central bank governor blamed what he described as psychological warfare by the country’s adversaries for the rial’s decline, saying the current exchange rate against major currencies reflects fear rather than economic fundamentals.
“The current exchange rate is a rate of fear and the result of the enemy’s psychological warfare,” Mohammad Reza Farzin said.
“The enemy is trying to create fear, panic, and instability in the country’s economy through false news and the creation of fake foreign exchange channels on social media, most of which are operated on servers outside the country,” he added.
Iran’s currency, the rial, traded at more than 118,000 to the US dollar on Tehran’s open market on Thursday morning, up from around 116,400 a day earlier.
Washington is seeking stiff concessions from Iran for any peace deal, the Washington Post reported on Thursday citing a US official, including curbs to its missile program and support for armed allies in the region.
The United States wants Tehran to commit to direct talks with the United States, ending uranium enrichment, curbing its missile program and ending funding for its armed affiliated in the Middle East, the newspaper cited the official as saying.
European-triggered international sanctions were reimposed on Tehran over the weekend as a standoff over Iran's nuclear activities lingers despite Israeli and US attacks in June which US President Donald Trump says "obliterated" Iran's program.
According to the US official cited by the Post, the so-called snapback sanctions will “create the environment” for “a diplomatic solution."
Tehran denies seeking a bomb and has called the new sanctions an illegal attempt to violate its sovereignty and end enrichment activities permitted by international law.
On Wednesday, Iran's security chief Ali Larijani said US attempts to dictate its military capabilities, foreign policy and nuclear rights were unacceptable and anticipated the outcome of any talks before they had even began.
The Trump administration and Tehran held two months of talks earlier this year to reach an agreement on Iran's disputed nuclear program.
But the day after Trump's 60-day deadline passed, Israel launched a surprise attack on Iran on June 13, striking military and nuclear facilities as well as senior commanders and officials.
Hundreds of military personnel and civilians were killed. Iran retaliated with ballistic missiles and drones which killed 31 Israeli civilians and an off-duty soldier.
On June 22, the US joined the campaign, hitting three major nuclear sites in Isfahan, Fordow, and Natanz, which President Trump said destroyed Iran’s capacity to build a nuclear bomb.
A ceasefire was brokered by the United States on June 24, ending the 12-day war.
Arab caution
Tensions remain high in the region, especially after a failed Israeli attempt to assassinate senior Hamas officials based in Qatar last month.
A senior Arab government official close to the Trump administration cited by the Post cautioned against a continuing cycle of violence.
“The region today cannot go through the same Iranian-Israeli war or the other wars of the last two years. The cost is too high,” the daily quoted the official as saying, adding “de-escalation” and "diplomacy has to be the way forward".
Since the ceasefire, the United Kingdom, France, and Germany in August have pushed Iran to enter direct negotiations with the US and fully cooperate with the International Atomic Energy Agency (IAEA). Iran, however, had suspended cooperation in response to the attacks.
The three European powers warned that if Iran refused, they would trigger the return of UN sanctions under a UN resolution codifying a now mostly lapsed 2015 nuclear deal. Those sanctions are now in force.
The new sanctions further strained Iran’s already fragile economy. Oil exports, the country’s main source of revenue, have faced renewed restrictions, threatening foreign currency earnings.
The Iranian rial has continued to lose value against the dollar, pushing inflation higher and worsening the cost of living crisis. International banking channels remain largely closed to Iran, hampering trade and investment.
Prices of daily essentials in Iran are rising daily and even hourly, a member of parliament’s economic committee said, warning that wages have not kept pace, amid the country’s economic crisis.
Fatemeh Maghsoudi said wages have barely increased.
“We cannot sit idly by and watch price fluctuations in essential goods that affect people’s daily lives,” she added.
Iran’s foreign ministry condemned a joint statement by the G7 countries the previous day saying they would enforce new UN sanctions against Iran and blaming Tehran for a diplomatic impasse over its nuclear program.
Foreign ministry spokesman Esmail Baghaei called the statement “hypocritical and a distortion of reality.”
“These seven countries, because of their hypocritical and irresponsible actions regarding the rule of law, peace, and international security, lack any moral authority to lecture others,” Baghaei added.
Washington is seeking to overthrow Iran’s ruling system after rejecting Tehran’s proposal for direct talks, the Revolutionary Guards-affiliated Javan newspaper said, accusing the United States of trying to achieve its goals through economic pressure and fueling domestic unrest instead of military action.
“The US goal is to overthrow the system in Iran. Since it does not see war as a suitable method, it wants to achieve this through soft measures such as sanctions and creating public discontent,” the paper said.
The newspaper also called US President Donald Trump’s Middle East envoy, Steve Witkoff, a “fraud,” adding that those who believed negotiations could solve Iran’s economic problems should now recognise that Washington never intended to engage in a way that benefits Tehran, and the country must find an alternative path.
Iran’s rial weakened on Thursday to about 1,180,000 per US dollar on Tehran’s unofficial market, roughly a week after the United Nations reimposed snapback sanctions, as President Masoud Pezeshkian urged cost-cutting and efficiency to shield households.
Traders also quoted the euro around 1,386,500 rials and the pound at about 1,591,200.
The UN measures, restored over Iran’s nuclear program, have added pressure to an economy already struggling with high inflation and repeated supply strains. Iran denies seeking nuclear weapons.
Visiting Bandar Abbas on Thursday, Pezeshkian said savings and better management could soften the blow.
“We can organize livelihoods, living conditions and housing by saving 10% in costs, which is equivalent to $16–18 billion a year,” he said.
“They say with snapback, they will sanction you, while we have sanctioned ourselves,” he added, arguing that curbing waste and relying less on oil and gas would blunt external pressure.
“They scare us with snapback because we tied our life to oil and gas,” he said. “I think of a day when we have neither oil nor gas. Should we die?”
The president called for practical conservation across government. He said employees and managers could work in smaller offices and avoid unnecessary energy use, recalling that at the United Nations “the corridor was partitioned and managers worked there in 2-by-3 rooms, next to the Secretary-General’s office. In Iran, everyone has a room, and the secretary has a room. You can avoid keeping all the lights on.”
