Iran currency crash causes chaos
Fears rise as country worries over diaper shortage, loss of deal with U.S.
TEHRAN, IRAN — Iran’s rial fell to a record low on Wednesday as worried residents of Tehran lined up outside beleaguered moneychangers, part of a staggering 140-per cent drop in the currency’s value since America pulled out of the nuclear deal only four months ago.
Those who went to work at the start of the Iranian week on Saturday saw their money shed a quarter of its value by the time they left the office Wednesday. Signs of the currency chaos can be seen everywhere in Tehran, where travel agents offer vacation prices only in hard currency and diapers have disappeared from store shelves — something acknowledged by the supreme leader. Many exchange shops in downtown Tehran simply turned off their electronic signs showing the current rate for the U.S. dollar, while some Iranians who wanted hard currency sought out informal money traders on street corners. Exchange shops that remained open offered 150,000 rials to the U.S. dollar.
“Everyone’s just nervous,” said Mostafa Shahriar, 40, who was seeking dollars.
There was no immediate acknowledgement of the drop on state media.
Iran’s economy has faced troubled times in the past, whether from the shah overspending on military arms in the 1970s or the Western sanctions following the 1979 Islamic Revolution and U.S. Embassy takeover. Drastic fluctuations in oil prices have also taken a toll. This time, however, feels different. The currency has crashed along with hope many felt following the 2015 nuclear deal Iran struck with world powers, including the administration of then-President Barack Obama.
Iran agreed to limit its enrichment of uranium in exchange for the lifting of some sanctions. The West had feared Iran would use its nuclear material to build atomic bombs, while Tehran has always insisted its activities are purely peaceful. In May, despite the United Nations repeatedly acknowledging Iran had lived up to the terms of the deal, President Donald Trump withdrew America from the accord. He said he wanted stricter terms put on Iran that included limiting its ballistic missile program, curtailing its regional influence and forever limiting its nuclear activities.
While European nations say they want the deal to continue, America’s enormous influence in global financial markets led oil companies and airplane manufacturers to quickly withdraw from working in the country. Harsher sanctions loom in early November, including those targeting Iran’s oil industry, a key source of hard currency.
The Trump administration denies it is seeking to overthrow Iran’s government through economic pressure, but Iranian officials say the link is clear.
Ayatollah Ali Khamenei, Iran’s supreme leader, called the U.S. moves economic “sabotage” this past weekend, and specifically mentioned the diaper shortage. Some 70 per cent of material for disposal diapers is imported.