Iranian officials lashed out Tuesday over the free fall of the rial, which lost nearly 25% against the dollar in just a week, by blaming illegal trading rings and fiscal mismanagement, and conceding that international sanctions have hurt its economy.

The rial fluctuated between 35,500 to 40,000 to the dollar on Tuesday, according to money exchangers in Tehran. It was down from 34,200 to a dollar just a day earlier on Monday and 23,000 on Sept. 24.

The...