Printed on: October 04, 2012
Iran tightens grip as currency dives
TEHRAN, Iran (AP) -- Iranian authorities used aggressive measures Wednesday in an attempt to halt the nosedive of the country's currency, making arrests, vowing to stamp out sidewalk money changers and warning merchants against fueling the mounting public anger over the economy.
There were unconfirmed reports of sporadic violence. Associated Press photos showed riot police blocking a street with the charred hulks of a garbage can and a motorcycle that had been set on fire. Smoke was rising from the area in central Tehran near the main bazaar.
The sweeping responses to the freefall of the rial -- which has lost more than a third of its value in a week -- underscored the worries for Iranian leaders after months of dismissing the West's economic squeeze seeking to rein in Tehran's nuclear program. A declining currency causes economic shifts such as making imported goods more expensive.
Although the currency crisis is blamed on several factors -- including internal government policies -- the rush to dump rials appears to reflect an underlying perception that international sanctions have deepened problems like runaway inflation and soaring prices for imports and that the only safe hedge is to grab dollars or euros.
If the economic turmoil intensifies, it could boost pressure on the ruling system before elections in June to pick President Mahmoud Ahmadinejad's successor.
Public grumbling has grown steadily louder over a punishing combination of a falling currency and rising prices, which have put some staples such as chicken and lamb out of reach of many low-income Iranians. Earlier this week, a petition signed by about 10,000 workers was sent to the labor minister to complain that even paying rents has become a struggle.