Iran says it has enough reserves after Bessent warns of economic collapse

U.S. Treasury Secretary Scott Bessent warned Monday that Iran's economy could collapse "within weeks or months" under mounting American sanctions pressure, as he opened the Group of 20 finance ministers meeting in Asheville, North Carolina, seeking to rally the world's largest economies behind Washington's campaign to isolate Tehran.aljazeera+1

Iran's central bank governor fired back on Tuesday. Abdolnaser Hemmati said the country has sufficient foreign currency reserves and that the central bank is prepared to inject up to $2 billion into the foreign exchange market to calm recent volatility. "I am telling the President of the United States: Iran has currency and it has enough," Hemmati said, according to Iran's semi-official Tasnim news agency.reuters+1

Escalating Economic Pressure

Bessent told reporters that Iran is "lashing out kinetically because they are losing economically" and said the goal of the sanctions is "to create the conditions that they will want to come to the table" for negotiations. He told Reuters Thomson Reuters Corporation ↗ 0.75% on Sunday that the U.S. would likely unveil new sanctions on a weekly basis.investing+1

The next step, Bessent indicated, could be cutting a financial institution entirely off from the dollar-based financial system. The warning followed penalties imposed Friday on the United Arab Emirates branches of Egypt's Banque Misr over alleged financial ties to Iran. "We're starting with the banks, and we're telling the banks it's not okay to have Iranian money and to aid the regime," he said.aljazeera

The pressure campaign falls under "Operation Economic Outcast," launched on August 23 by the Treasury Department, which imposed sanctions on five sectors of Iran's economy — aviation, digital assets, gold, technology, and shipping — along with designations of nearly 60 entities, individuals, and vessels.treasury+1

International Backing and Pushback

Bessent thanked the European Union and European Central Bank for what he called "fulsome support" for the sanctions effort. The European Commission said in a statement that it "welcomes efforts at ensuring that Iran ceases its destabilising activities and engages in peace negotiations with good faith". Bessent also told CNBC Comcast Corporation ↗ 0.40% that the U.S. and China share more common ground on Iran policy than areas of disagreement.investing+1

Despite Bessent's confidence, Hemmati pushed back against what he called "psychological warfare." Iran's rial plunged to a record low in August, crossing two million to the dollar, and annual inflation reached 66 percent in July. "Economic conditions and livelihood management have become difficult, but collapse has never happened and will never happen," Hemmati said.reuters

Markets and the Fed

The G20 gathering also featured Federal Reserve Chairman Kevin Warsh's first international policy meeting since taking office in May. Warsh signaled that price stability remains the Fed's priority, noting that inflation remains too high — driven in part by energy prices, which jumped 14.7 percent year-over-year in July. On Wall Street, the Nasdaq Composite, the S&P 500, and the Dow Jones Industrial Average all trended lower on Monday as tensions weighed on investor sentiment.aljazeera