The rial was trading at 44,790 to the dollar on Saturday, strengthening from 49,000 more than a week ago. The stability comes after CBI combined its package, which includes a significant deposit rate increase, with a police crackdown on unregulated currency traders.
As part of the measures announced on Feb. 14, banks are now authorized for two weeks to offer interest rates of up to 20% on fixed one-year deposits, against the previous 15%.
Last week, Tehran Police, at the behest of the central bank, raided the hub of currency hawkers near the British Embassy in Tehran and rounded up 90 traders who were deemed market disruptors, Financial Tribune reported.
Authorities also closed the bank accounts of 775 people suspected of distorting the foreign exchange market with capital movements totaling 200 trillion rials ($4 billion).
CBI Governor Valiollah Seif defended the crackdown, saying the move was in line with "global norms."
The crackdown intensified on Saturday, however, with Tasnim News Agency reporting that intelligence officials with a mandate from the judiciary had frozen the bank accounts of 86 currency traders and smugglers, arresting 10 of them.
The report said these accounts had a total turnover of 530 trillion rials ($11.83 billion). An anonymous source was quoted as saying by the news agency that such measures would "continue seriously in the future" and that heavy punishment will be meted out to "currency speculators" and "destructors" of the forex market.
As the new stability sets in the forex market, analysts are warning the regulator against "fixing" the nominal value of rial and instead are urging monetary authorities to further reduce the inflation.
In order to attract investors toward a formal currency market, CBI has also issued currency bonds in rial but their value would be calculated in foreign exchange.
The bank is also launching the sale of gold coins at attractive prices to reverse the longstanding rally gripping the market.