Police clash with protesters over rial’s plunge
RIOT police clashed with demonstrators and foreign-exchange dealers in Tehran yesterday over the collapse of the Iranian currency, which has lost 40% of its value against the dollar in a week, witnesses said.
Police fired tear gas to disperse the demonstrators, angered by the plunge in the value of the rial. Protesters shouted slogans against President Mahmoud Ahmadinejad, saying his economic policies had fuelled the economic crisis.
The rial has hit record lows against the 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.
Iranians have scrambled to buy hard currencies, pushing down the rial. With Iran’s official inflation rate at about 25%, 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.”
The protests pose a threat to Mr Ahmadinejad rather than the government, but his term will end in June when a presidential election is due and he cannot run for a third term, observers said. They expect the government to stop the exchange dealings and pump in money to stabilise the currency and prevent protests from spreading.
Tehran’s main bazaar, whose merchants played a major role in Iran’s revolution in 1979, was closed yesterday, witnesses said. A shop- keeper who sells household goods there told Reuters that the instability of the rial was preventing merchants from quoting accurate prices.
The protests centred on the market 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. International news coverage is restricted.
The currency dived to a record low on Tuesday to 37,500 to the dollar in the free market, from about 34,200 at the close of business on Monday, foreign exchange traders in Tehran said. On Monday last week, it traded at about 24,600/$.
Mr Ahmadinejad on Tuesday 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 suggests that the sanctions are having a serious effect on the Iranian economy. On Sunday, Israeli Finance Minister Yuval Steinitz said Iran’s economy was “on the verge of collapse”.
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 Mr Ahmadinejad to parliament for questioning over the rial’s fall. Reuters