Iran tries to stem currency plunge
BY Associated Press
Thursday, October 04, 2012
10/04/12 at 4:31 AM
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.
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 shifts in an economy such as making imported goods more expensive.
Although the currency crisis is blamed on a combination of factors - including internal government policies - the rush to dump rials appears to reflect an underlying perception that international sanctions have deepened problems such as 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 next June to pick President Mahmoud Ahmadinejad's successor. That has the potential to hinder nuclear talks with the West until after the elections.
One of Ahmadinejad's main critics, parliament speaker Ali Larijani, has led the calls to blame the currency crisis mostly on allegedly misguided government monetary policies.
In reply, Ahmadinejad warned that he could consider resigning if his government is put under too much pressure.
Tuesday's rate of 35,500 rials against the U.S. dollar compared with 24,000 a week ago on the unofficial street trading rate, which is widely followed in Iran. It was close to 10,000 rials for $1 as recently as early 2011.
Exchange houses were closed Wednesday, and currency websites were blocked from providing updates on the latest rates.
Original Print Headline: Iran attempts to stem currency fall
Mahmoud Ahmadinejad: If Iran's economic turmoil intensifies, it could boost pressure on the ruling system before elections next June to pick President Amadinejad's successor. That has the potential to hinder nuclear talks with the West until after the elections