Thursday, October 4, 2012

Currency Collapse In Iran

The Iran File

Currency Collapse: The National Post writes: "Afghan money changers gather to deal with foreign currency at a money change market in Herat October 4, 2012. Afghanistan has imposed a cap on U.S. dollar flows across the border with Iran amid clashes there between Iranian police and protesters prompted by a collapse in the rial currency, Afghan police said on Thursday."
Photo Credit: Mohammad Shoiab, Reuters
Source: National Post

An article from Reuters and published in Canada's National Post says that international sanctions against Iran have weakened its currency, the rial, and therefore has greatly affected its economy. Iranian President Mahmoud Ahmadinejad has been receiving most of the blame for the financial collapse, which is affecting merchants and families:
Shops in Tehran’s Grand Bazaar stayed shut and police patrolled the area on Thursday as authorities struggled to restore normalcy a day after security forces clashed with anti-government protesters angered by the collapse of the currency. Traders from the bazaar, whose merchants supported Iran’s 1979 Islamic revolution, told Reuters by telephone that most stores were closed because their owners had stayed away for safety reasons.
On Wednesday, riot police scuffled with demonstrators and arrested money changers in the area during protests triggered by the plunge of the Iranian rial, which has lost about a third of its value against the dollar over the past 10 days. Pressure on President Mahmoud Ahmadinejad mounted as business associations blamed him for much of the country’s economic crisis, which has been fuelled by Western sanctions imposed over Iran’s disputed nuclear programme.
Thus far the anger has not been directed against the Islamic system of government and Supreme Leader Ayatollah Ali Khamenei. That Iranian residents are frustrated is understandable, since the currency devaluation has increased inflation dramatically, thereby raising the price of goods, the article points out. "The slide has cut living standards, forced Iran to reduce its imports and fuelled job losses in the industrial sector. It has also boosted inflation, which Steve Hanke, an economics professor at Johns Hopkins University in the United States, said had now become hyperinflation."

You can read the rest of the article at [National Post]