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Iranian traders and shopkeepers staged a second day of protests Monday after the country’s currency plummeted to a new record low against the US dollar.
Videos on social media showed hundreds taking part in rallies in Saadi Street in downtown Tehran as well as in the Shush neighbourhood near Tehran’s main Grand Bazaar, which played a crucial role in the 1979 Islamic Revolution that ousted the monarchy and brought Islamists to power.
Traders shut their shops and asked others to do the same. The semiofficial ILNA news agency said many businesses and merchants stopped trading even though some kept their shops open.
There were no reports of police raids though security was tight at the protests, according to witnesses.
On Sunday, protest gatherings were limited to two major mobile markets in downtown Tehran, where the demonstrators chanted anti-government slogans.
Rapidly devaluing currency
Iran’s rial on Sunday plunged to 1.42 million to the dollar. On Monday, it traded at 1.38 million rials to the dollar.
Exchange rates for Iran’s currency vary sharply depending on whether official or free-market figures are used. On international forex platforms, the euro trades at around 49,000 rials, a rate that reflects Iran’s tightly controlled official exchange system that is largely inaccessible to ordinary Iranians.
In contrast, the free-market rate — commonly cited by local traders and international media — is far weaker, with the euro trading at well over a million rials, or around 150,000 tomans, highlighting the gap between state-set rates and the real value of the currency on the street amid inflation, sanctions and capital flight.
The rapid depreciation is compounding inflationary pressure, pushing up prices of food and other daily necessities and further straining household budgets, a trend that could worsen by a gasoline price change introduced in recent days.
Is hyperinflation around the corner?
According to the state statistics center, inflation rate in December rose to 42.2% from the same period last year, and is 1.8% higher than in November. Foodstuff prices rose 72% and health and medical items were up 50% from December last year, according to the statistics center. Many critics see the rate a sign of an approaching hyperinflation.
Reports in official Iranian media said that the government plans to increase taxes in the Iranian new year that begins on 21 March have caused more concern.
Iran’s currency was officially trading at 32,000 rials to the dollar at the time of the 2015 nuclear accord that lifted international sanctions in exchange for tight controls on Iran’s nuclear program.
US tensions strain the economy
That deal unraveled after US President Donald Trump unilaterally withdrew the United States from it in 2018. There is also uncertainty over the risk of renewed conflict following June’s 12-day war involving Iran and Israel.
Many Iranians also fear the possibility of a broader confrontation that could draw in the United States, adding to market anxiety.
In September, the United Nations reimposed nuclear-related sanctions on Iran through what diplomats described as the “snapback” mechanism. Those measures once again froze Iranian assets abroad, halted arms transactions with Tehran and imposed penalties tied to Iran’s ballistic missile program.
