Police clash with protesters in Iran as currency continues to plunge

Ahmadinejad could face increasing domestic attacks before elections

Police threatened merchants who closed their shops in Tehran's main bazaar and launched crackdowns on sidewalk money changers on today as part of a push to halt the plunge of Iran's currency, which has shed more than a third its value in less than a week.

The measures underscore the serious concern by officials facing one of the most potentially destabilizing scenarios, which has been partly blamed on the fallout from Western sanctions over Tehran's nuclear program. 

Public anger has mounted over a punishing combination of a falling currency and rising prices, which have put some staples such as chicken and lamb out of reach of many low-income Iranians. 

The shrinking rial also has rekindled bitter internal political feuds between President Mahmoud Ahmadinejad and his powerful rivals, who claim the crisis has also been fed by misguided government monetary policies. 

Iran's currency hit a record low of 35,500 rials against the US dollar Tuesday on the unofficial street trading rate, which is widely followed in Iran. It was about 24,000 to the dollar a week ago and close to 10,000 rials for $1 as recently as early 2011. 

Exchange houses were closed today and currency websites were blocked from providing updates. 

In a potentially serious showdown, merchants appeared to stage widespread closures in Tehran's bazaar, the traditional business hub in Iran's capital. The sprawling bazaar has played a critical role in charting Iran's political course — leading a revolt that wrung pro-democratic concession from the ruling monarchy more than a century ago and siding with the 1979 Islamic Revolution. 

The semiofficial Mehr news agency reported Wednesday that the bazaar was closed for security reasons. The agency later quoted police Col. Khalili Helali as saying that bazaar was not officially closed, but noting that authorities will take action against many merchants who have shuttered their shops. 

"The Tehran bazaar is not closed. Police will deal with the guilds that have closed their shops to cause (economic) disruption," Mehr quoted Helali as saying. 

Meanwhile, anti-riot police patrolled streets in central Tehran where freelance money dealers work. There were unconfirmed reports of arrests, but Iranian officials have issued no formal statements. 

The currency's nosedive has added to the burdens on Iran's economy as it struggles with tougher sanctions targeting its crucial oil exports and measures blocking it from key international banking networks. The U.S. and its allies have imposed the measures in attempts to force Iranian concessions over its nuclear program, which the West says is aimed at developing atomic weapons. Tehran insists the program is for peaceful purposes. 

The rial's sharp decline is attributed to a combination of Western sanctions and government policies — such as fueling inflation by increasing the money supply while also holding down bank interest rates. That prompted many people to withdraw their rials to exchange for foreign currency over the past months. 

On Tuesday, Ahmadinejad insisted Iran's economic underpinnings were sound, but blamed the rial's tumble on "psychological pressures" from the sanctions and currency speculators. 

He described the sanctions as part of a "heavy battle" that has succeeded in driving down oil exports "a bit," but he gave no precise figures. Some oil analysts estimate exports have fallen by more than 30 percent since July, when the 27-nation European Union halted purchases of Iranian crude. 

Many economists and experts have accused the government of deliberately provoking an increase in dollar rates in order to meet its own budget deficit. The government earns more than 90 percent of Iran's overall foreign exchange revenues as a result of oil sales. Higher dollar rates bring higher rial earnings for the government. 

It could also bring more political heat on Ahmadinejad, who has been left severely weakened after unsuccessfully challenging Supreme Leader Ayatollah Ali Khamenei over the powers of the presidency. Ahmadinejad now could face increasing domestic attacks before elections, including possibly being called before parliament for questioning over the currency upheavals. 

Earlier this year, Ahmadinejad became the first president hauled before the 290-seat parliament for questioning over his public feud with Khamenei.

AP

PROMOTED VIDEO
News
ebooksNow available in paperback
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film Ridley Scott reveals truth behind casting decisions of Exodus
News
Andy Murray with his girlfriend of nine years, Kim Sears who he has got engaged to
peopleWimbledon champion announces engagement to girlfriend Kim Sears
Arts and Entertainment
Jake Quickenden and Edwina Currie are joining the I'm A Celebrity...Get Me Out Of Here! camp
tv
Arts and Entertainment
Roisin, James and Sanjay in the boardroom
tvReview: This week's failing project manager had to go
Life and Style
Fright night: the board game dates back to at least 1890
life
Life and Style
fashion
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Argyll Scott International: Senior Business Analyst- Insurance

Negotiable: Argyll Scott International: Senior Business Analyst - Insurance ...

Recruitment Genius: Property Manager

£25000 - £29000 per annum: Recruitment Genius: This independent, growing Sales...

Recruitment Genius: Graphic Designer

£16000 - £20000 per annum: Recruitment Genius: Multi-skilled graphic designer ...

Austen Lloyd: Court of Protection Solicitor

£30000 - £50000 per annum + EXCELLENT: Austen Lloyd: Court of Protection Solic...

Day In a Page

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

In pictures: There's a Good Girl exhibition

The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

UK firm Biscuiteers is giving cookies a makeover

It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
Can SkySaga capture the Minecraft magic?

Can SkySaga capture the Minecraft magic?

It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
The King's School is way ahead of the pack when it comes to using the latest classroom technology

Staying connected: The King's School

The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
Christmas 2014: 23 best women's perfumes

Festively fragrant: the best women's perfumes

Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches