The Iranian rial continued to depreciate sharply on Saturday, even after the central bank announced it would inject up to $2 billion in foreign currency into the market through state-owned banks, failing to halt the currency from sliding further to a record low.

Free market data showed the US dollar rose to approximately 2.688 million to 2.695 million rials, up from 2.632 million the previous day. Over the past year, the rial has lost more than half of its value against the US dollar.

Iran's state television said state-owned banks have begun selling up to $2 billion in foreign currency to increase dollar supply in the market and support the local currency. However, based on the latest exchange rate movements, the central bank's intervention has so far failed to reverse market expectations that the rial will continue to depreciate.

This currency pressure comes as Iran's economy faces multiple external and internal shocks. US sanctions continue to restrict Iran's access to the international financial system and foreign exchange, while a maritime blockade further squeezes oil exports — the country's most important source of foreign currency revenue.

Meanwhile, Iran's inflation rate has exceeded 70%, continuously eroding residents' purchasing power and intensifying concerns that the real value of the local currency will continue to decline. As the rial keeps depreciating, more and more Iranian residents are choosing to shift their savings into US dollars, other hard currencies, and gold to reduce losses from the falling purchasing power of the local currency.

This safe-haven demand in turn continues to increase demand for foreign currency, making it difficult for the central bank to stabilize the exchange rate in the short term even as it increases dollar supply to the market. Mehdi Darabi, an official in charge of foreign exchange affairs at Iran's central bank, attributed part of the depreciation pressure to market expectations. He said remarks by US officials about the possible collapse of Iran's economy are affecting market sentiment, and claimed the current rial decline is only temporary. This is Iran's official explanation for the exchange rate fluctuations, but it does not change the fact that the free market exchange rate continues to weaken.

From a market mechanism perspective, a $2 billion intervention can increase foreign currency supply in the short term, but as long as oil export revenue remains restricted, domestic inflation stays high, and residents and businesses continue to move funds into dollars and gold, the central bank will need to keep burning through its foreign exchange reserves to maintain exchange rate stability.

Therefore, what is truly noteworthy about this round of rial depreciation is not how many dollars the central bank injected at once, but rather that Iran's sources of foreign currency income are being compressed while domestic safe-haven demand for dollars and gold continues to rise. Under these circumstances, selling foreign exchange alone is not yet enough to reverse the rial's depreciation trend.