Currency plunge sparks violence
Iranian police crack down on Tehran’s money changers in push to halt economic crisis
TEHRAN, IRAN— Clashes erupted in the centre of the Iranian capital on Wednesday between money changers and security forces after riot police on motorcycles used batons and tear gas to shut down a long-tolerated black-market for foreign currency, witnesses reported.
It was the first instance of a violent intervention over the money-changing business in Tehran since the national currency, the rial, which has been gradually losing value in recent years, dropped drastically over the past week.
The rial hit a record low, losing 40 per cent of its worth against the dollar. Economists have called the plunge a stark reflection of the economic pain in Iran caused in part by the western sanctions over Iran’s disputed nuclear program.
Witnesses in and around Manoucheri St., where the black-market money changers do business, described cat-and-mouse chases between riot police and money changers.
The violence came a day after President Mahmoud Ahmadinejad, in a nationally televised news conference, asked Iranian citizens not to sell their rials for other currencies, suggesting the problem had been caused in part by speculators.
Ahmadinejad also warned that a “band of 22 people” with the power to manipulate exchange rates could face arrest, and he accused the U.S. and unspecified “domestic allies” of waging a psychological war on the country.
As the clashes began on Wednesday, garment and jewelry merchants in the city’s main bazaar, less than a kilometre away, closed their shops, apparently in protest.
The Mehr news agency said the bazaar, the heart of Tehran’s commercial centre, had been closed for “security reasons.”
The secretary-general of the Tehran Bazaar and Trade Union, a powerful official close to the government, accused unspecified outside instigators of pressuring bazaar merchants to close their shops.
The official, Ahmad Karimi Esfahani, was quoted by the Iranian Labour news agency as saying that most merchants had wanted to remain open for business. “Those now present are trying to show the bazaar as closed,” he was quoted as saying. “They are guided by foreigners.”
Other bazaar traders hinted that the closings were organized by powerful opponents of Ahmadinejad, who were trying to make him look weak by shutting down Tehran’s most popular shopping centre.
Members of parliament and Shiite Muslim clerics have called for an end to the blackmarket currency trade, accusing money changers of driving down the rial’s value.
Others have called upon the government to buy up rials and sell other foreign currencies warehoused in the central bank’s reserves to restore stability to the national currency.
In recent weeks, traders and regular citizens had gathered by the hundreds on Manoucheri St. in Tehran to buy foreign currencies in anticipation of further weakening in the rial.
A rising sense of economic crisis in Iran could also pose new political challenges for the country’s leaders.