News | Currency Crisis Erupts: Bazaar Strike, Raid on Rial Dealers, Protests

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5:26 p.m. IRST, 13 Mehr/October 4 A glimpse of Ferdowsi Street a day after the protests.

1:45 p.m. IRST, 13 Mehr/October 4 This clip from Iranian state television shows that Iran's merchant class -- or bazaaris -- were involved in Wednesday's strike, contrary to the assertions of some semiofficial news agencies in Iran. One man tells the reporter that their protest was not intended to "fan the flames [for the benefit of Iran's] enemies," but to ease living conditions for people. An older man in a pink shirt adds, "We even called the police station this morning to tell them that our actions would be for the good. We have no bad intentions."

4:30 a.m. IRST, 13 Mehr/October 4 Many videos have been made available online that purport to show protests over the currency crisis that took place in Tehran on Wednesday; the Facebook page of the group Freedom Messenger, which describes its mission as campaigning for "the masses which remain oppressed by the Islamic Republic," has posted a broad selection of these videos. While it is not possible for Tehran Bureau to verify their authenticity, the images of sizable protest marches and the cries of "Let go of Syria, think of us," "Death to the government that lies," and "Unity, unity" audible in some do conform with independent reports we have received.

The following video has been vetted and determined to be authentic by BBC Persian. It is actually a compilation of three different videos: first, a look at the shuttered bazaar and the heavy police presence there; second, a protest march involving at least a few thousand people; and third, a brief sequence shot from a moving motorbike that shows an unusually large number of closed storefronts for midweek outside the bazaar.

11:25 p.m. IRST, 12 Mehr/October 3 A Tehran Bureau correspondent spoke with residents of the capital to find out what ordinary Iranians think about the escalating currency crisis, which has seen the rial lose almost 40 percent of its foreign exchange value in the past week and a half, and today's events. Here's what some of them had to say:

"This is unbelievable. Things keep getting worse and no one can do anything about it. Three of my friends who had business have gone bankrupt in the past week; a month ago, they were all talking about retiring and enjoying life a bit. Now they either have to spend the rest of their lives in jail or go on the run."

-- Retired policeman, 60

"I was in Ferdowsi [Square] today and I saw with my own eyes the angry people. They were ordinary people who were fed up, but the news says they were thugs and a group of opportunists trying to start riots."

-- Computer technician, 30

"The rial tops the list of least valued currencies in the world. At least we are number one in something!"

-- English teacher, 25

"I was driving down Ferdowsi Street past the charred trashcans when the radio said the people of Spain have taken to the streets in protest over the government's wrong economic policies. For a minute, I thought I was in Spain and I wanted to head for the beach. You call this a country?"

-- Anonymous

"The problem is when [Central Bank Governor Mahmoud] Bahmani opens his mouth things get worse. He should just not have an opinion about things."

-- Shopkeeper, 27

In August 2010, when the government reported that Iran's inflation rate was 9.1 percent, Bahmani predicted that it would be brought down to between 4 and 5 percent. As of August 2012, the officially reported inflation rate was 23.5 percent.

"These people have no concept of statistics. They open their mouths and say whatever comes to their mind first. Just today, a lawmaker said we have 40 billion [dollars] in our forex reserves and we can use some of it to fix the current problems and we will return the dollar to 1,600 tomans [16,000 rials]. I want to know where they get these imaginary figures from."

-- Physician, 45

"We can't continue like this. My son is studying in the U.K. and its his last year in school, but we can't send him any money.... We can't afford it anymore. My son is on the other side of the world alone and with no money. This is the worst thing for a parent, to not be able to do anything for their child."

-- Mother, 54

"I want to say this is what rock bottom looks like, but I'm scared I'll say something and tomorrow things will get worse."

-- Broker, 29

10:20 p.m. IRST, 12 Mehr/October 3 Much of the Tehran bazaar went on strike Wednesday as the Iranian rial crashed to 40,000 per U.S. dollar on the open market. Clashes broke out between security forces and currency dealers in the Iranian capital as the government moved to close down the unregulated exchange of rials for foreign money. Dispersed protests have been reported from around the city, with crowds said to be chanting slogans that range from "Let go of Syria, think of us" to "Death to the government that lies." Scores of people gathered outside the headquarters of the Central Bank of Iran, shouting for the bank's governor, Mahmoud Bahmani, to step down.

On Monday, September 24, when the open-market exchange rate was 24,600 rials per dollar, Bahmani announced that the Central Bank was opening a foreign exchange center to ease imports of essential manufacturing, construction, and transportation-related goods. The rial hit what was then an all-time low of 26,500 the following day. Since January, the Central Bank has maintained a fixed official rate of 12,260 rials to the dollar. On Tuesday, President Mahmoud Ahmadinejad declared that the rapid decline of Iran's currency was the result of a "psychological battle" being waged by "the enemy."

On its Farsi website, the semiofficial Mehr News Agency reported that Ahmad Karimi Esfahani, head of Tehran's bazaari federation, said that the Tehran bazaar had been shut down over "security" concerns and that he expected it to reopen Thursday. He denied that bazaar merchants were involved in any group demonstrations. As of yet, there has been no mention of the bazaar strike, the crackdown on currency dealers, or the protests in any of the Islamic Republic's many official and semiofficial English-language media outlets.

Tehran Bureau contributor Ali Chenar spoke to people in and around the bazaar. He files the following dispatch:

Many merchants in the bazaar had already shut down their stores since Monday, claiming that they do not know what prices they should be charging their customers. The sudden fall in the rial's value has brought it to a level unthinkable only a week ago.

"The problem is that the exchange rate always sends a signal about market stability and government reliability," said Muhammad, an economic activist. He adds, "With the rial in freefall, many believe that the situation is simply out of control."

He explains the dilemma faced by the merchants. "Many in the bazaar save in dollars and need hard currency to import the products they sell. If the products are produced domestically then they need hard currency to import the material needed in the production process. The machinery and other services cost too, and usually we have to pay companies who use the [open-market] dollar-rial exchange rate to estimate their costs."

Babak, a graduate student, is worried about his upcoming sabbatical trip abroad. "With the hard currency rising so fast, I am not sure if I can afford it anymore." He also cannot wait much longer to make a decision -- the deadline to apply for a visa is fast approaching.

Businesses face similar decisions about whether to renew their orders and sell their inventories. Mahmoud, an apprentice in the bazaar, wants people to know that "we would like to work, but how can you work when you do not know what will happen tomorrow."

Ahmad Reza, a dealer in Persian rugs, is mad at the government. "They ruined everything. They wasted all the revenues generated by oil and now they are not supplying the market with hard currency.... Every day, something new happens: one day it is sanctions; the next, new banking regulations. The authorities always need to be greased with some extra cash." The challenge of keeping his business going is making him infuriated. "Some days, I just want to go to the Sahara and just yell. I do not know why I come to this store anymore."

Hamid, a social science teacher who lives near the bazaar just south of central Tehran, believes that the "bazaaris have always been unhappy and frustrated. Almost every government has found ways to interfere with them and to tell them what to do." What is different now "is that Ahmadinejad has become more vulnerable." Hamid observes that criticizing his administration is no longer equivalent to opposing the regime as a whole. On his way home, he saw people had set fire to garbage and other flammables. "Bazaaris usually hate governments, but I think they hate the current administration the most."

"They want to get rid of Ahmadinejad," agrees graduate student Shima. According to her, the merchant protests are "staged.... These bazaaris are out for their own self-interest and want to bring down Ahmadinejad."

In Shima's view, "Things are too uncertain to know what will come next." Others voice deeper concern, like Babak, who says, "Looking at the violence in Syria, we do not want that here."

The following video of a large-scale protest was reportedly shot in Tehran Wednesday. We are unable to verify its authenticity, though the visible evidence does match weather conditions in the capital today, which was sunny with a high of 79 degrees Fahrenheit.

Photo of currency: © Hessam Samavatian via Flickr.

Copyright © 2012 Tehran Bureau

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