Iran’s national currency rebounded Wednesday from record lows after the central bank chief acknowledged with rare candor that the “ psychological effects” of new U.S. sanctions were partly responsible for the devaluation and said the country might raise interest rates to stabilize the market.

The comments by central bank Governor Mahmoud Bahmani were a clear sign of the toll that sanctions are taking on Iran’s oil-dominated economy. The U. S. and its allies are trying to ramp up pressure on Tehran over its nuclear program, which they suspect is aimed at developing a weapon, though Iran denies it.

“Fluctuations in the currency market in recent days resulted primarily from psychological factors and can’t continue,” Bahmani said in comments published in several newspapers Wednesday. “I say this with great certainty that sanctions don’t create problems for the country’s economy. While knowing this, the enemy is depending on creating psychological tensions. If we are intimidated, we will be playing into the enemy’s hands,” he added.

The rial rose to about 15,600 against the U.S. dollar as fiscal authorities planned to hold an emergency session on Wednesday. The currency hit an all-time low of 17,800 late Monday, two days after President Barack Obama signed into law sanctions targeting Iran’s central bank and oil sectors. Though the sanctions do not go into effect for six more months, they are already sending ripples through the markets.

The central bank chief said Iranian officials are considering increasing interest rates on bank deposits, among other measures, to try to stabilize markets.

“The government is considering controlling the currency market and will take action soon. Dollar rates will decrease soon,” he said. “Using monetary and financial instruments such as issuing bonds with high (interest) rates are on our agenda so that we can direct floating liquidity to banks,” he said, adding this was an urgent priority.

Bahmani did not say how the government could control the market, but pegging the exchange rate is not seen as a likely step. Instead, the central bank could inject foreign currency or increase bank interest rates to stabilize the market.

The semi- official Mehr news agency said the rial’s rebound Wednesday was a reaction to Bahmani’s remarks.

Analysts say it is clear Iran’s economy is in dire straits, after being subjected to four rounds of U.N. sanctions since 2006 and other measures by the U. S. and allies.

Iran on Tuesday tried to play down any links between the new U.S. sanctions and the nosedive of the rial.

“For the time being, it has nothing to do with foreign policy,” said Foreign Ministry spokesman Ramin Mehmanparast.

But officials are clearly nervous. One sign of the nervousness has been repeated threats to close the Strait of Hormuz — a strategic oil route in the Persian Gulf through which one-sixth of the world’s oil passes on tankers — if the U.S. sanctions are imposed.

The comments helped drive oil prices up above $100 per barrel. Iran is the world’s fourth-largest oil producer, with an output of about 4 million barrels a day. It relies on oil exports for about 80 percent of its public revenues.

The latest U. S. sanctions would bar foreign financial institutions that do business with Iran’s Central Bank from opening or maintaining correspondent operations in the United States. The Obama administration, however, is looking to soften the impact of the measure, fearing they could lead to a spike in global crude oil prices or pressure key allies that import Iranian oil.

In another expression of growing hostility over the sanctions issue, Iran’s army chief, Gen. Ataollah Salehi, said Tuesday an “American warship” that left the Gulf should not return. He didn’t cite a specific vessel, but the U.S. Navy’s 5th Fleet has said that the aircraft carrier USS John C. Stennis and another vessel headed out from the Gulf and through the Strait of Hormuz last week after a visit to Dubai’s Jebel Ali port.

The semi-official Fars news agency reported that the central bank governor has warned he may quit if the government intervenes in shaping monetary and banking policies.

The comments show the divisions within the government over how to deal with the currency market, where the government periodically intervenes contrary to central bank demands to stay out.