Iranians protest as currency loses 40% of its value

Thu, Oct 4, 2012, 01:00

DUBAI – Riot police have been confronted by demonstrators and foreign exchange dealers in Tehran over the collapse of the Iranian currency, which has lost 40 per cent of its value against the dollar in a week, said witnesses.

Police fired tear gas yesterday to disperse the demonstrators, angered by the plunge in the value of the rial. Protesters shouted slogans against Iranian president Mahmoud Ahmadinejad, saying his economic policies had fuelled the economic crisis.

The rial has hit record lows against the US dollar almost daily as western economic sanctions imposed over Iran’s disputed nuclear programme have slashed Iran’s export earnings from oil, undermining the central bank’s ability to support the currency.

Panicking Iranians have scrambled to buy hard currencies, pushing down the rial. With Iran’s official inflation rate at about 25 per cent, the currency’s weakness is hurting living standards and threatening jobs.

The government blames speculators for the rial’s collapse and ordered the security services to take action against them.

“Everyone wants to buy dollars and it’s clear there’s a bit of a bank run,” said a western diplomat based in Tehran. “Ahmadinejad’s announcement of using police against exchangers and speculators didn’t help at all. Now people are even more worried.”

Close watchers of Iran say the protests pose a threat to Mr Ahmadinejad rather than the government. But his term will end in June and he cannot run for a third time in any case. They expect the government to stop the foreign exchange dealings and pump in money to stabilise the currency and prevent protests spreading.

Tehran’s main bazaar, whose merchants played a big role in Iran’s 1979 revolution, was closed yesterday, said witnesses. A shopkeeper who sells household goods there said the instability of the rial was preventing merchants from quoting accurate prices.

The protests centred on the bazaar and spread, according to the opposition website Kaleme, to Imam Khomeini Square and Ferdowsi Avenue – scene of bloody protests against Mr Ahmadinejad’s re-election in 2009.

Protesters shouted slogans like “Mahmoud the traitor – you’ve ruined the country!” and “Don’t fear, don’t fear, we are all together!” stated the website.

Mr Ahmadinejad has blamed the crisis on the US-led economic sanctions on Iran and insisted the country could ride out the crisis. He urged Iranians not to change their money for dollars and said security forces should act against 22 “ringleaders” in the currency market.

The rial’s slide suggested the western sanctions were having a serious impact. On Sunday, Israeli finance minister Yuval Steinitz said Iran’s economy was “on the verge of collapse”. Many businessmen and citizens say the government is at least partly to blame for the currency crisis and Mr Ahmadinejad has been criticised by enemies in parliament.

Parliamentary news agency Icana quoted Mohammad Bayatian, a member of parliament’s industry and mines committee, as saying enough signatures had been collected to call Ahmadinejad for questioning over the rial’s fall. – (Reuters)