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Iran currency crisis sparks Tehran street clashes Iran currency crisis sparks Tehran street clashes
(about 1 hour later)
Iranian riot police have clashed with demonstrators and foreign exchange dealers in Tehran over the collapse of the country's currency, which has lost a third of its value against the dollar in a week, according to witnesses. Hundreds of demonstrators in the Iranian capital, Tehran, have clashed with riot police, who used batons and teargas to disperse the crowd, which had gathered in protest against the crisis raging over the country's national currency.
Police fired teargas to disperse demonstrators angered by the plunge in the value of the Iranian rial. Protesters shouted slogans against the president, Mahmoud Ahmadinejad, saying his economic policies had fuelled the economic crisis. The Grand Bazaar, the heartbeat of Tehran's economy, went on strike on Wednesday, with various businesses shutting down and owners gathering in scattered groups chanting anti-government slogans in reaction to the plummeting value of the rial, which has hit all-time lows this week.
The rial has hit record lows against the US dollar almost daily as western economic sanctions imposed over Iran's disputed nuclear programme have slashed Iran's export earnings from oil, undermining the central bank's ability to support the currency. Witnesses in Tehran said angry protesters and foreign exchange dealers were demonstrating in areas close to the Bazaar in the south of the capital, where many exchange bureaux are located.
Panicking Iranians have scrambled to buy hard currencies, pushing down the rial. With Iran's official inflation rate running at around 25%, the currency's weakness is hurting living standards and threatens to worsen a recent spate of job losses in Iran's industrial sector. "The Bazaaris shouted Allahu Akbar [God is great] as they closed down their shops in the morning," said a witness. "It's impossible to do business in the current situation."
Tehran's main bazaar, one of the city's major shopping areas, is closed, witnesses say. A shopkeeper who sells household goods there told Reuters the instability of the rial was preventing merchants from quoting accurate prices. Security forces were sent to quell the protests. "They used teargas to disperse demonstrators in Ferdowsi Street and also blocked the streets close to the protests in order to prevent people joining them," said another witness.
A bazaar official, Ahmad Karimi Esfahani, told the Iranian Labour News Agency that the bazaar had been closed because of shopkeepers' safety concerns but would reopen on Thursday. "Some shop windows in that area have been smashed."
The government of the president, Mahmoud Ahmadinejad, has failed to bring the rial under control. It has lost 57% of its value in the past three months and 75% in comparison with the end of last year. The dollar is now three times stronger than early last year.
Ahmadinejad was bombarded with questions about the currency crisis on Tuesday as he spoke to reporters in a press conference but the embattled president rejected the suggestion that it was the result of his economic policies or government incompetence.
Instead, he blamed the rial's slump on his enemies abroad and opponents at home, saying his government was the victim of a "psychological war". Ahmadinejad blamed western sanctions for the crisis.
Iran, one of the world's largest oil producers, relies on crude sales for 80% of its export revenue and to bring in most of the foreign currency. The latest US and EU embargo on the imports of Iranian oil has affected the government's foreign currency reserves.
On Tuesday Iranian authorities announced they would send security services to calm the market but Wednesday's developments appear to show that the move has backfired.