Riot police armed with batons and tear gas confronted money lenders and shopkeepers in Tehran today as worries about the failing rial have lead to anger and street protests. The Iranian currency has lost more than 40 percent of its value against the U.S. dollar in the last week, hammering businesses and traders who are finding it impossible to maintain prices. Things have gotten so bad that cross-border trade with Turkey has come to a standstill.
On Tuesday, President Mahmoud Ahmadinejad responded to currency crisis by vowing to crack down on illegal money changing and speculators, further angering the rather sizable number of traders (legitimate and black market) who rely on the exchanges to do business. On Wednesday morning, about 100 traders and money lenders gathered in front of Iran's central bank to demand greater action on the struggling economy, and many of the shopkeepers at one of Tehran's largest bazaars closed their stores in solidarity. Riot police quickly dispersed the group, while other officers swarmed on a popular black market district, rounding up money changers in a series of "cat-and-mouse" chases. Protesters responded with larger marches and burning tires.
While the Iranian media tried to downplay the protests as the work of "a limited number of people," videos posted on YouTube show crowds that appear to be in the thousands flooding the streets and shopping areas. The protests are reminiscent of the early days of the Green Revolution that followed Ahmadinejad's contested reelection in 2009, but ended in a deadly crackdown by the government.
The dramatic fall of the rial seems to be the first solid evidence that the strict oil sanctions placed on Iran because of their nuclear energy program are starting to have the desired effect. Their economy is on the verge of collapse and average citizens are beginning to lash out in anger at the government. Whether it's a bump in the road, the prelude to another crackdown, or the start of a legitimate uprising is still unknown, but if the regime lets the economic situation continue to deteriorate, the risk of a major upheaval could become very real.