Iran arrests currency traders as rial collapses
Iranian police arrested around 100 money changers on Wednesday as they scrambled to contain the decline of the rial, which has lost a quarter of its value in six months.
A video by state broadcaster IRINN showed dozens of currency hawkers, who normally ply their trade across the street from the British Embassy on Ferdowsi Street in central Tehran, being rounded up by police.
Iran’s currency has collapsed from 38,400 rials to the dollar in July to a record low of 48,400 on Wednesday.
Tehran’s chief of police, General Hossein Rahimi, told the media that 10 foreign exchange outlets had also been shut down and 16 had received official warnings.
“Driven by greed, the detainees were attempting to disrupt the market and economic order,” Rahimi told Fars News Agency. “The judicial system should firmly punish them.” Aggressive purchases of dollars by currency speculators appear to have sped up the rial’s decline. Central Bank Governor Valiollah Seif warned speculators last month not to bet against the currency but that did not change the trend.
Iran’s 2015 nuclear deal with world powers, which lifted many international sanctions, had raised hopes that the currency would regain its lost value.
The big driver was the decision by the Central Bank to lower interest rates in September.
Iran’s banks had offered sky-high rates in recent years – often over 20 percent – as they competed for deposits against many individuals and businesses who prefer to keep their money in dollars or real estate.
With many banks looking shaky, Iran’s Central Bank decreed that they could no long offer interest rates above 15 per cent – a move which traders say pushed many people back towards the dollar.
AFP and Reuters contributed to this story.