Abdolnaser Hemmati, as governor of the Central Bank of Iran, could likely reduce volatility or delay depreciation for short periods, but the evidence does not support the claim that he could durably control the dollar price under Iran’s sanctions-heavy conditions.
What the evidence says
The central constraint was not simply policy skill, but the structure of Iran’s economy and foreign-exchange market. Sanctions reduced Iran’s access to usable foreign exchange, weakened banking channels, and made it harder to repatriate oil revenues or move funds through normal payment systems. In that environment, even an active central bank governor had limited capacity to supply dollars consistently enough to anchor the market.
The literature also shows that inflation, money growth, and fiscal pressure made exchange-rate defense fragile. When liquidity expands and inflation stays high, demand for foreign currency tends to rise, which weakens any attempt to hold the dollar price down. This means the exchange rate is not just a central-bank issue; it is tied to the broader macroeconomic balance.
A next factor is the parallel market. Several studies indicate that expectations, sanctions news, and scarcity psychology can push the unofficial exchange rate upward even when the official rate is administratively managed. That is important because the “dollar price” people actually face in the market can move independently of formal policy announcements when trust in the official regime is weak.
What Hemmati could realistically do
The evidence supports a narrower and more realistic interpretation: The Central Bank of Iran could sometimes smooth the exchange rate, manage shortages and use administrative allocation or direct intervention when foreign exchange was available. But those tools worked mainly as short-run stabilization devices, not as a permanent solution. This is especially true in a system where multiple exchange rates exist. The evidence suggests that Iran relied on official and parallel pricing channels, which can help ration scarce foreign currency but also preserve distortions and keep the gap between market and official prices alive. So even if Hemmati could influence the official rate, the broader market dollar price could still remain under pressure.
Why durable control was unlikely
Sanctions reduced usable dollars. The literature repeatedly links sanctions to lower oil exports, blocked transfers and weaker access to hard currency. That matters because exchange-rate defense requires not just a policy decision, but actual dollars to sell. If usable reserves are constrained, the central bank’s intervention capacity is automatically limited.
Inflation and liquidity kept pressure on the rial. Research shows that inflation persistence and money growth are central drivers of exchange-rate weakness in Iran. Exchange-rate changes also pass through into domestic prices, creating a feedback loop: a weaker rial raises inflation, and inflation in turn makes the currency harder to defend.
Fiscal dominance reduced independence. The evidence also points to fiscal dominance, where government financing needs pass through the banking system and weaken monetary control. When monetary policy is accommodating fiscal pressure, it becomes harder for the central bank to sustain a stable exchange rate. In other words, even a strong governor cannot fully offset a macro environment that keeps creating rial liquidity.
Expectations and black-market behavior mattered. The studies suggest sanctions news and public expectations can directly affect the unofficial exchange rate. This means the market dollar price can rise because people expect future scarcity, even before shortages fully materialize. That makes credibility essential—but credibility is difficult to maintain when sanctions and inflation are high.
Hemmati could influence the dollar price temporarily, but not control it permanently. The main constraints were sanctions, reserve scarcity, inflation, and fiscal pressure. The market dollar price was shaped as much by expectations and parallel-market dynamics as by central-bank policy.
Put simply, the central bank could manage pressure, but it could not eliminate it.
Bottom line
Hemmati, as the CBI governor, could not realistically control the dollar price in a durable way. He may have been able to slow the rise, smooth volatility or defend the currency for brief periods when dollars were available. But the dominant forces—sanctions, limited usable reserves, inflation, fiscal dominance, and market expectations—were stronger than any single central-bank intervention.
