Can Iran’s economic buffers withstand new US sanctions?

# Overview

As the United States rolls out a new sanctions campaign, Iranian authorities are trying to reassure domestic and international audiences that the economy will not collapse. Iran's central bank governor, Abdolnaser Hemmati, dismissed U.S. assertions of an impending collapse as psychological warfare and told a banking conference that "collapse has never occurred and will never occur," according to Tasnim News Agency.

The practical question is less about rhetoric and more about capacity: Iran claims it has buffers, but how effectively those buffers can be used to keep prices stable, maintain imports, and sustain basic economic activity under tighter external pressure is unclear.

# What Tehran is saying

Iran's central bank is focused on containing currency panic. Public messaging aims to prevent self-fulfilling runs on the rial and panic buying that would accelerate inflation. Hemmati's remarks are aimed at calming households, traders, and international partners that might still trade with Iran despite sanctions.

# What "buffers" mean here

Buffers refer to assets and mechanisms Iran can deploy to soften shocks. That includes foreign currency reserves, credit lines with friendly partners, alternative trade channels, existing contracts for imports, and domestic policy levers such as subsidies or controlled imports. The piece emphasizes that these buffers are real but finite — usable for a period, not indefinitely.

# The core constraint: turning buffers into usable economic power

Two linked bottlenecks determine whether buffers suffice:

• Liquidity and access: Even if reserves exist, sanctions can limit the ability to move funds or to clear transactions with international partners. Without usable payment channels, reserves are less effective.

• Market confidence and transmission: Central bank interventions must be large and timely enough to stabilize the currency and prices. If public confidence collapses, interventions become costlier and less effective, and informal or shadow economic activity can expand.

The article frames these as the central question: how much more deterioration can Iran absorb before stabilization becomes impossible or prohibitively expensive.

The reporting situates the new sanctions against a backdrop of earlier pressures: a war that damaged infrastructure, tighter restrictions on oil, and a shrinking capacity to absorb shocks. Related coverage cited in the story notes falling trade volumes and concerns about how long Iran's informal networks and alternate channels can sustain economic activity under growing pressure.

# Short-term implications

If Tehran can maintain credible messaging and targeted interventions, the immediate risk is a managed slowdown: higher prices and constrained imports rather than systemic collapse. But if sanctions cut off payment routes or if confidence erodes sharply, shortages and runaway inflation would follow more quickly.

# What to watch next

• Reports of restricted payment channels or partners reducing trade with Iran.

• Any shift in public messaging that signals resource exhaustion or policy reversal.

# Bottom line