1. Skip to content
  2. Skip to main menu
  3. Skip to more DW sites

Currency unrest in Iran

October 3, 2012

A rapid plunge in Iran's currency has resulted in clashes in Tehran's central money exchange district, Ferdowsi. Police squads fired tear gas to disperse protesters and shut kiosks, according to witnesses.

A close-up of a Tehran trader's hand clasping dollar notes Lizenz: DW
Image: DW

The rial, Iran's currency, has lost at least a third of its value against the US dollar in the past week, prompting President Mahmoud Ahmadinejad to largely blame Western sanctions.

A spokesman for the Tehran Grand Bazaar said it had also been closed because of shopkeepers' safety concerns, but it would reopen on Thursday. Ferdowsi Avenue nearby was the scene of hefty protests against Ahmadinejad's re-election in 2009, which were eventually put down by forces of his regime.

Scramble for hard cash

Protestors stand in a street as garbage is set on fire, in central Tehran, near the old main bazaar in Tehran, Iran, on 03 October 2012. EPA/stringer epa03419599
In protest, garbage was set on fire near Tehran's main bazaarImage: picture-alliance/dpa

In recent days, Iranians have scrambled to buy hard foreign currencies, pushing down the rial. The rate on Wednesday was put at 36,000 rials to the dollar, which was only an estimate because Iranian money tracking websites were censored.

Merchants say doing business has become nearly impossible and Iranian families face spiraling food costs, with annual inflation said to be running at 25 percent.

Late on Tuesday, Ahmadinejad rejected any blame over the currency plunge and vowed that Iran would not curb its nuclear program because of the sanctions by Western nations.

Hoarding at home

The Iranian news agency Fars on Wednesday quoted the national police chief Esmail Ahmadi Moghadam as saying that a special unit had been set up to "combat those perturbing the currency market."

He said many Iranians were stashing foreign currencies and gold at home.

Copyright: iran-emrooz via Hossein Kermani, DW Farsi
Protesters massed near the bazaar, where money is exchangedImage: iran-emrooz

A Western diplomat based in Tehran, quoted by the news agency Reuters said: "Everyone wants to buy dollars and it's clear there's a bit of a bank run."

"Ahmadinejad's announcement of using police against exchangers and speculators didn't help at all. Now people are even more worried," the diplomat said. Verification is difficult because of Iran restrictions on foreign journalists.

In Washington, US Secretary of State Hillary Clinton said sanctions could be remedied in "short order" if the Iranian government cooperated with the grouping P5+1, comprising the five permanent members of the UN Security Council as well as Germany.

Iran's currency problem and sinking economy was the fault of Iranian leaders, she added.

Internet outages as well

Iran, which maintains one of the world's largest internet filters, experienced major outages on Wednesday, according to the news agency Reuters.

A spokesman for Iran's High Council of Cyberspace, Mehdi Akhavan Behabadi, told Iran's Labour News Agency that internet capacity had been curtailed because of "constant cyber attacks."

"All of these attacks have been organised. And they have in mind the country's nuclear, oil, and information networks," Behabadi said.

Last month, Iran said a computer virus was detected inside control system at its Kharg Island oil export terminal.

Most of Iran's internet restrictions date back to 2009 when anti-government protestors used social network sites to publicize mass protests after Ahmadinejad's disputed re-election.

ipj/rc (dpa, Reuters, AFP)