After months of a drastic and ongoing depreciation, the Iranian rial started recouping losses last week, mostly on the back of government intervention. The Central Bank of Iran (CBI) has since been largely successful in maintaining the value of the national currency, which has taken a beating due to structural problems in the economy and psychological factors relating to the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA). But the question now on the minds of Iranian observers and investors alike is how sustainable the monetary regulator's policies will be, especially considering its track record of fanning the currency crisis with poor decision making.

The rial, which has lost approximately 75% of its value this year, hit a record low rate of 190,000 against the US dollar on Sept. 26, shortly after the showdown between Presidents Hassan Rouhani and Donald Trump at the United Nations. Three days later, a top state body comprised of the heads of the executive, legislative and judicial branches gave the CBI the green light to intervene in the foreign exchange market. Of note, only weeks before, recently appointed central bank chief Abdolnaser Hemmati had promised to stay away from such interventions.

Since the green light from the Supreme Council of Economic Coordination immunized the CBI from the hazards that got its top foreign exchange official arrested in early August, the regulator has started pumping serious money into the currency market, and cracked down on black market speculators. Meanwhile, in what seemed to be an orchestrated psychological operation to restore the public’s trust, almost all Iranian media outlets — whether conservative or Reformist — and a number of senior officials, including Rouhani's chief of staff, asserted that the positive trajectory of the rial is here to stay. In parallel, news emerged that the judiciary has sentenced three major economic offenders — including a man branded the "sultan of coins" — to death, sending a stern warning to black market players.

The combined effect of these factors led the rial to gain as much as 25% in two days to reach about 140,000, where it is currently hovering. Indeed, the same herd mentality that had driven people to form long queues in front of exchange shops to buy dollars only days before, prompted scores to gather again across the country, this time to prevent losses by selling hoarded hard currency. But unsurprisingly, the few that were ready to buy hard currency only did so at relatively low rates. Many on social media have accused the government of profiting off the predictable panicked response, something Rouhani has categorically denied. The president also promised that the CBI is ready to maintain for a whole year the same level of market interference it has displayed over the past week.