Protests erupt in Iran over sinking currency

Iran's currency has dropped nearly 50% in value over the last six months--in large part because of the return of U.S. sanctions--and Iranian merchants held a mass strike Monday to protest it.
By Rick Docksai | Oct 28, 2018
Thousands of merchants in Iran's capital of Tehran closed their shops and went on strike Monday against the troubled state of Iran's currency. The merchants were pushing back against a nearly 50% drop in the value of the Iranian rial over the last six months, a deflation that is said to stem from the United States' re-imposition of sanctions on Iran.

The rial sank to 90,000 against the dollar Monday, down from 75,500 to the dollar Thursday. It stood at 42,890 to the dollar at the end of last year.

Monday's protest ended after several hours, and merchants reopened their shops. But their concerns still loom large, according to Abdollah Esfiandari, head of the historical covered market's administrative board, who said that "the high exchange rate, foreign currency fluctuations, goods being blocked at customs, and the lack of clear criteria for duties" all contribute to the merchants' discontent.

"The demands of bazaar traders are legitimate. They want the situation on the foreign exchange market to be clarified once and for all," Esfiandari said.

The currency's value has plunged with U.S. President Trump's decision to abandon the nuclear agreement and reestablish some sanctions. The sanctions, which go into effect in August and November, are triggering a mass flight of Iranians' savings from the rial to dollars, due to fears that the sanctions will reduce the revenue Iran earns from oil exports.

As the rial's value drops, Iranians experience surging inflation and rising prices for imported goods. In response, Iranian officials have banned the import of 1,339 goods that Iranians can produce in-country, including many home appliances, textile products, footwear, leather items, furniture, medical goods, and some machinery. Iran may be returning to being a "resistance economy" that weathers U.S.-led sanctions and keeps currency reserves afloat by being as economically self-sufficient as possible.

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