Iran has moved to halt the spiralling descent in the value of the Iranian rial (IRR) by barring unregulated trading on the open market and setting a unified official foreign exchange rate of 42,000 to the dollar.

Vice President Eshaq Jahangiri announced the move, Fars News Agency reported late on April 9. On state TV, meanwhile, government spokesman Mohammad Bagher Nobakht said: “We will certainly use all of the state’s strengths and capabilities in order to, God-willing, steady the market. We accept that this situation is not a good one and it’s against what we want.”

Anxieties over Iran’s economic future in the face of unrelenting hostility from Donald Trump—who on May 12 may withdraw the US from the nuclear deal that since just over two years ago has relieved Tehran of heavy economic sanctions and who has lately appointed Iran hawks to his administration—have been a major factor in driving the open market value of the IRR to the dollar down to as low as IRR63,000 in the past two days—the weakest rate on record for the rial—with trade throttled by independent forex companies refusing to sell hard currencies. A year ago, it was worth around IRR37,600 to the greenback. The market turbulence has also seen the rial plunge to record lows of IRR72,000 and IRR88,000 against the euro and the pound, respectively. All the while, the official rate against the dollar remained at around IRR37,800.

Jahangiri said: “From tomorrow, the rate for everybody including people wanting to import, research-based companies, travellers and even scientists will be 4,200 tomans [IRR42,000], and this will be sufficient for all the country's needs; any other higher rate will be illegal."

Central Bank of Iran (CBI) governor Valiollah Seif had given advance warning that the regulator was set to unify the official and unofficial foreign currency rates.

The 11:30 p.m. announcement by Jahangiri should put an immediate halt to the run on the national currency. “All sides have reached consensus on general principles with regards to foreign currencies, but the details will be reviewed and completed in future sessions,” Janhangir added.

Mohammad Ali Shabani, an Iran analyst, tweeted after the announcement that “Rouhani has moved to eliminate the key source of rent[iersm]. But in doing so, loses some flexibility in the face of external pressures and as indicated by tough rhetoric on illicit FX trading, opens the door for another form of rent seeking. Watch out for turmoil ahead as rent seekers fight back.”

Iranian newspaper Jahan e’ San’at claimed in its April 9 edition that the Rouhani administration was more or less content with the currency devaluation against the basket of major currencies.

The newspaper wrote that the sudden collapse was in line with the CBI’s plan to unify the two exchange rates allowing the rial to depreciate gradually to compensate for Iran’s high inflation and also help make exports more competitive in the global economy.

The devaluation of the rial also lessens Iran’s internal debts over the past year by half in real terms due to many banks either owing sums to the government or state-backed entities.

Other newspapers claimed that the collapse in the currency was part of a “currency coup” orchestrated by “deep state” actors to show flaws in President Hassan Rouhani’s administration of the economy over the past few years. Rouhani, a pragmatic centrist, has twice defeated the hardliners in presidential elections.