Iranian police clash with protesters over currency plunge

A money changer holds Iranian rial banknotes as he waits for customers in Tehran's business district January 7, 2012. REUTERS/Raheb Homavandi

(Reuters) – Riot police clashed with demonstrators and foreign exchange dealers in Tehran on Wednesday over the collapse of the Iranian currency, which has lost 40 percent of its value against the dollar in a week, witnesses said.

Police fired tear gas to disperse the demonstrators, angered by the plunge in the value of the rial. Protesters shouted slogans against President Mahmoud Ahmadinejad, saying his economic policies had fuelled the economic crisis.

The rial has hit record lows against the U.S. 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.

Panicking Iranians have scrambled to buy hard currencies, pushing down the rial. With Iran’s official inflation rate at around 25 percent, the currency’s weakness is hurting living standards and threatening jobs.

The government blames speculators for the rial’s collapse and ordered the security services to take action against them.

“Everyone wants to buy dollars and it’s clear there’s a bit of a bank run,” said a Western diplomat based in Tehran.

 

Reuters has the full article

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