DUBAI/TEHRAN: Riot police clashed with demonstrators and arrested money changers in Tehran Wednesday in disturbances over the collapse of the Iranian currency, which has lost 40 percent 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 riyal. Protesters denounced President Mahmoud Ahmadinejad as a “traitor” whose policies had fueled the crisis.
In a clampdown on the unofficial foreign currency market, a number of traders selling dollars were arrested after authorities ordered security forces to take action against those they see as speculators.
The riyal has hit record lows against the U.S. dollar almost daily as Western economic sanctions imposed over Iran’s disputed nuclear program have cut Iran’s export earnings from oil, undermining the central bank’s ability to support the currency.
Panicking Iranians have scrambled to buy hard currency, pushing down the riyal whose increasing weakness is hurting living standards and threatening jobs.
“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 are seen as posing a threat to Ahmadinejad rather than the government, which is expected to put a stop to the foreign exchange black market, pump in funds to stabilize the currency and prevent the demonstrations from spreading.
Tehran’s main bazaar, whose merchants played a major role in Iran’s revolution in 1979, was closed Wednesday. A shopkeeper who sells household goods told Reuters that currency chaos was preventing merchants from quoting accurate prices.
A computer dealer said he had halted sales because of the volatility in the currency market. “The same product can change price within an hour,” he said by telephone.
The protests centered around the bazaar and spread, according to the opposition website Kaleme, to Imam Khomeini Square and Ferdowsi Avenue – scene of bloody protests against Ahmadinejad’s re-election in 2009.
Protesters shouted slogans like “Mahmoud the traitor – you’ve ruined the country” and “Don’t fear, don’t fear – we are all together,” the website said.
The national currency dived to a record low Tuesday to 37,500 to the U.S. dollar in the free market, from about 34,200 at the close of business Monday, foreign exchange traders in Tehran said. On Monday last week, it traded at around 24,600.
Mehrdad Emadi, an Iranian-born economic adviser to the EU, said the slide in the riyal had prompted Iranians to try to limit their losses by buying dollars. “The rush out of the riyal shows that everyone wants to sell. But clearly it is going to make the life of ordinary Iranians very painful and difficult.”
Many businessmen and ordinary citizens say the government is at least partly to blame for the currency crisis, and Ahmadinejad has been criticized by enemies in parliament.
However, he blamed the crisis Tuesday on the U.S.-led economic sanctions on Iran and insisted the country could ride out the crisis. He said security forces should act against 22 “ringleaders” in the currency market. But U.S. Secretary of State Hillary Clinton said Wednesday Tehran was to blame. “I think the Iranian government deserves responsibility for what is going on inside Iran, and that is who should be held accountable,” Clinton said in Washington.
“Of course the sanctions have had an impact as well but those could be remedied in short order if the Iranian government were willing to work with the P5+1 and the rest of the international community in a sincere manner.”
The P5+1 – the six powers leading the nuclear negotiations with Iran – are seeking reassurances that Iran is not seeking covertly to develop a weapons capability. Tehran denies any military ambition and insists its nuclear program is for civilian purposes only.