Bourse and Bazaar | AFP: Iran replaced its central bank chief on Wednesday, local media reported, amid fallout over banking scandals and the crisis facing the country's economy.

Valiollah Seif, who had served as the bank's governor since President Hassan Rouhani took power in August 2013, was replaced by Abdolnasser Hemmati following a cabinet meeting, according to the official IRNA news agency.

Hemmati, 61, previously served as head of Central Insurance of Iran, as well as both Sina Bank and Bank Melli. He had been slated to become ambassador to China until he was recalled at the last minute.

Seif has been criticized particularly over his handling of a currency crisis that has seen the rial lose more than half its value against the dollar in the past year.

An attempt in April to enforce a fixed rate for the rial sparked a boom in black market exchanges, forcing the central bank to backtrack as the currency's street value crashed to record lows in June.

The crisis coincided with Washington's announcement in May that it was pulling out of the 2015 nuclear deal and reimposing full sanctions on Tehran, exacerbating the run on the rial.

The US also slapped individual sanctions on Seif in May, accusing him of helping Iran's Revolutionary Guard Corps transfer millions of dollars to Lebanon's Hezbollah.

Rouhani thanked Seif for his "strong and serious service", and said the cabinet had "full confidence" in Hemmati.

He said a key priority was tackling "illegal credit institutions."

Bankruptcies at several unlicensed lenders�which had offered high interest rates and cheap loans with little capital to back them up�wiped out the savings of millions of depositors and has been a key driver of recent protests.

Rouhani vowed to crackdown on unlicensed banks when he came to power.

His government has been pressured to repay lost deposits, further straining government resources.