Sustainable provision of foreign currency for essential goods at a fixed rate, combined with policies to manage expectations, can play a key role in curbing market turbulence and strengthening public trust.

An analysis of the recent situation in the currency market indicates that the fluctuations are tied more to expectations and psychological conditions than to real changes in supply and demand. Similar to the experience around the New Year holidays—when currency and gold prices rose amid political tensions but dropped once the political atmosphere calmed—the current surge in prices can also be largely attributed to temporary excitement. This reality highlights the need for policymakers to focus more than ever on managing the psychological environment of the market, since instability fueled by perceptions and media narratives can have damaging effects on people’s livelihoods and economic planning.

Continuation of Supplying Essential Goods at Preferential Rates

One of the reassuring points in the remarks of CBI head was the emphasis on continuing to allocate foreign currency at the rate of 285,000 rials for essential goods. This policy, initially adopted to support people’s livelihoods and control food inflation, remains in place. Its continuation sends a clear message to society: despite fluctuations in the unofficial market, food security and basic needs will be met at a stable and predictable rate. Such consistency can help ease social concerns and prevent inflationary expectations from reaching household tables.

Distinction Between the Official and Unofficial Currency Markets

A key element in Farzin’s remarks was his emphasis on distinguishing between the official and unofficial currency markets. The Central Bank supplies most of the country’s foreign exchange at the rate of 700000 rials, while higher rates are mainly active in the unofficial market. That market largely serves the needs of smuggling, capital flight, and unproductive activities rather than the real demands of the economy. Therefore, treating unofficial rates as an indicator of the country’s economic condition is a strategic error. Policymakers must make this distinction clear to the public to prevent the limited and high-risk fluctuations of the unofficial market from being perceived as a general measure of economic health.

Future Strategy: Managing Expectations and Strengthening Trust

Given current conditions, the CBI’s most important task in managing the currency market is to focus on controlling expectations and reinforcing public confidence. Transparency in currency policies, precise and timely communication, and active measures to reduce the gap between official and unofficial rates can help ease market tensions. At the same time, stronger cooperation with oversight and judicial bodies is necessary to counter illegal foreign exchange flows. Past experience has shown that whenever policymakers have managed the psychological environment with clarity and determination, the market has moved toward stability. Ultimately, maintaining this approach can pave the way for sustainable economic stability and ease pressures on different segments of society.