The short period of calm enjoyed by the Iranian rial (IRR) was shattered on September 3 as the currency sank to another all-time low.

It took IRR130,000 to purchase $1 in late trade on the open market, according to rates tracker Bonbast.com, with the rial having lost around 15% of its value in the past three days. By early evening trading on September 4, the dollar was selling at 138,000, marking a year to date decline of 221.7%. Prior to that, rates of more than 140.000 were seen.

Financial journalist Maziar Motamedi told AFP that the latest phase of devaluation occurred after recently appointed central bank governor Abdolnaser Hemmati on September 1 announced tighter restrictions on allocating foreign exchange reserves.

"Hemmati said that he wishes to be much more careful in allocating foreign currencies at [the heavily discounted] government rates, signalling a potential forthcoming shortage of hard currency," Motamedi reportedly said.

Also responding to the trading pressure was the Imami gold sovereign, the most traded sovereign on the Iranian market. It reached an historic high of IRR46,900,000 on September 3.

Panicked trading
Bouts of panicked trading in hard currency and gold sovereigns have been seen since the US in early May announced it was unilaterally walking out of the nuclear deal that shielded Iran from heavy sanctions in return for restrictions on its nuclear development programme. Instead Washington opted to reintroduce severe sanctions in an attempt at strangling Iran’s economy to the point where Tehran decides it has no choice but to come the table and agree to a reshaping of the country’s approach to Middle East affairs and tighter restrictions on its nuclear and ballistic missile research and development activities.

Financial difficulties at Iranian banks are now pretty much in plain sight, pockets of roaring inflation have beset consumer goods sectors and, unimpressed by the government’s response to the spreading economic malaise, Iran’s parliament has sacked the minister of economic affairs and finance as well as the minister of labour. In July, President Hassan Rouhani replaced the head of the central bank.

Some foreign economists have calculated that inflation in Iran should by now be realistically measured at somewhere over 200%.

The rial is set to come under even more pressure as November 5, the date on which the US has demanded oil importers stop accepting consignments of Iranian crude, nears.