Tehran Currency Traders Shut Shops as Police Patrol Streets

Most foreign currency shops and outlets in Tehran’s Grand Bazaar were shuttered today while hundreds of Iranian riot police patrolled in the downtown area a day after protests over the tumbling national currency.

Police units were visible around Ferdowsi and Manouchehri streets, near one of the main areas for currency traders in the capital, as well as roads surrounding the Grand Bazaar further south. The minority of exchange houses that did open failed to display prices or carry out transactions.

The rial fell to a record low of 35,000 to the dollar on Oct. 1, an 18 percent drop, on the unofficial market. The currency has plummeted since November when it traded at 13,200 to the greenback.

President Mahmoud Ahmadinejad, who in recent days has come under increasing criticism including from fellow politicians for his economic policies, has blamed the U.S. and European Union for fighting a “psychological war” against his nation. Tightening trade and financial restrictions, aimed at curbing Iran’s nuclear program, have limited Iran’s ability to sell oil, its biggest export, and other goods in return for currencies such as dollars and euros.

The U.K., France and Germany are pressing the EU to agree to new measures to bring Iran’s economy to its knees and bar its nuclear ambitions, according to several European diplomats.

Black Market

U.S. Undersecretary of the Treasury David Cohen is visiting France, Germany, Italy and the U.K. this week to discuss coordinating efforts to increase the pressure on the Iranian government. EU foreign ministers meet in Luxembourg on Oct. 15.

It was possible to purchase dollars on the black market at a price of 33,000 rials in Tehran today from a number of independent money changers stationed with their motorbikes along Ferdowsi and Hafez streets, an unofficial transaction which would be punishable by the authorities.

Several of the closed shops in the bazaar had a sign saying the site had been sealed “by order of the law.”

Khalil Helali, a police commander, warned yesterday that the closure of shops “with a view to creating economic disruption is unlawful,” and will be punished. If merchants go on strike, the police will seal their shops with approval from the judiciary, Helali said in a report today, according to the Tehran-based newspaper.

‘Destructive Effects’

Riot police were deployed yesterday after some shopkeepers didn’t open and trash cans were set alight in the streets, in the first visible signs of discontent since accelerating inflation and the rial’s slide in recent months.

Iranian authorities have arrested 16 people accused of fueling unrest in the currency markets, the state-run Mehr news agency said today.

Business associations held a meeting today and agreed to resume activity at the Grand Bazaar on Oct. 6 after the Iranian weekend, Mehr said. Their leaders said that the government’s policies and their destructive effects on the economy were responsible for the disruption, it said.

To contact the reporters on this story: Ladane Nasseri in Dubai at lnasseri@bloomberg.net; Yeganeh Salehi in Tehran at yalehi@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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