Business

Iran quiet after currency protests

Friday, October 05, 2012    

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TEHRAN, Iran — CALM returned to central Tehran yesterday, a day after it was rocked by protests over Iran's plunging currency, but money-changers and many shops were closed, witnesses told AFP.

Much of the Grand Bazaar —the normally bustling commercial heart of the city —was shuttered inside, but street side shops were open.

The inside of the historic maze was eerily quiet on what should be a very crowded day for Tehranis, whose weekend falls on Thursday and Friday.

In the nearby traditional money-changing district, police were stationed in large numbers outside closed exchange bureaux.

On Wednesday, hundreds of police and security personnel flooded central Tehran, closing the exchanges and rounding up unlicensed money-changers. Scuffles broke out with stone-throwing men, and trash dumpsters were set alight.

Sixteen people, described as profiteering "foreign exchange market disrupters", were arrested, the Tehran prosecutor's office said on its website.

They were accused of trading outside of authorised channels and creating public anxiety, "which resulted in the irrational increase in the forex rate".

The police action was part of efforts by authorities to halt the dive of the rial, which is at an all-time low against the dollar.

The rate of the rial against the dollar and other foreign currencies has been censored from exchange tracking websites in Iran.

In the past week it has shed around 40 per cent of its value, sharply accelerating its slide this year as Western sanctions worsen Iran's underlying economic problems.

It has started to become difficult for ordinary Iranians to afford staples, and import businesses have lost millions of dollars in a few days.

Wednesday's protests in Tehran were the first sign of public discontent.

Individual shopkeepers in the Bazaar said they had closed their stores because they were unable to do any profitable business.

Police responded by warning they faced prosecution if they did not reopen. But on Thursday around three-quarters of the Bazaar's shops remained closed.

One clothing vendor who was open for business yesterday said, on condition of anonymity: "I should be closed but I need whatever customers I can get. Maybe I'll close later on. The foreign exchange situation can't go on like this."

He blamed the rial's fall mostly on the sanctions. "America wants us to bend but we have our pride," he said.

Bazaar retail and production guilds said in a statement published by Mehr news agency that all the Bazaar will open on Saturday "with the presence of security forces."

They also took aim at Iran's government, which they said "inflicted damages on the nation's economy by taking wrong decisions."

The separate Bazaar and Trades Islamic Society sought to distance shopkeepers from any repercussions by blaming Wednesday's closure on a plot by "hypocrites" — Iran's word for the exiled dissident group the People's Mujahedeen of Iran — and on "elements linked to the enemies of Islam."

It said that "despite criticism it has of the government's economic polices and the president, (it) will stand to the death to defend the regime and the country."

The crisis has fuelled intense factional in-fighting in Iran, with President Mahmoud Ahmadinejad deflecting blame onto the sanctions and hardline rival camps.

On Tuesday he called the currency crisis a "psychological war on the exchange market" imposed by the West.

His detractors in return pointed fingers at Iran's monetary policies, which discourage bank deposits and fail to reverse sky-high inflation and unemployment.

US Secretary of State Hillary Clinton on Wednesday added to the internecine struggle, saying "the Iranian government deserves responsibility for what is going on inside Iran."

She added: "Of course the sanctions have had an impact as well but those could be remedied... if the Iranian government were willing to work with the... international community in a sincere manner."

Israeli Foreign Minister Avigdor Lieberman on Thursday told Israeli military radio, "the Arab Spring will be followed by a Persian Spring, instability is spreading in Iran, and not just in Tehran."

The US and the European Union have ratcheted up their sanctions on Iran this year to force it to curb its nuclear programme, which they suspect includes a drive to develop atomic weapons capability.

Iran, which says its nuclear activities are purely peaceful, has had its vital oil exports severely cut as a result, and is struggling to repatriate the billions of dollars its crude sales generate.

Ahmadinejad and other Iranian officials vow that despite the sanctions they will never bend on the nuclear issue.

"The aim of the pressure against the Iranian people is to make it yield. But it will never yield. That's why the enemy is angry," supreme leader Ayatollah Ali Khamenei said in a speech on Wednesday reported by state media.

— AFP

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