4:20am

Wed October 3, 2012
Business

Iran's Currency Drops Sharply In Value

Originally published on Wed October 3, 2012 5:59 pm

Transcript

STEVE INSKEEP, HOST:

We're following up this morning on the collapse of Iran's rial, it's currency which is leading to major developments today. Over the past week, Iran's currency has lost about 40 percent of its value or more, falling to an all-time low against the U.S. dollar, this as a result of U.S. and other sanctions against Iran. And that has led to protests and violence in the streets of Tehran today.

We're going to catch up now with Thomas Erdbrink. He's Tehran bureau chief for the New York Times. Welcome back to the program.

THOMAS ERDBRINK: Thank you.

INSKEEP: So what is happening on the streets?

ERDBRINK: There have been two main developments. First, there's been a strike at Tehran's Grand Bazaar, and people over there are telling me several hundreds of shopkeepers have closed their shops there in order to protest the fact that in their point of view, the government is not doing anything to stop the rial from plunging any further. And simultaneously, Iranian anti-riot police raided several locations where money is being exchanged on a kind of semi-tolerated black market. And that led to clashes with moneychangers, but also with bystanders.

People where telling me that tear gas was used, that riot police on motorcycles roamed the pavements and that they were actually fights between protesters and the anti-riot police.

Now, I'm hearing that things have calmed down now. Iran's security forces are, of course, very professional and experienced in putting down uprisings. But it's definitely a major development because this is the first time that there's actual protest on the streets against the plunge of the rial.

INSKEEP: So, there's protest against this immense loss in value of the currency that Iranians use in day-to-day life. Also, you said, a raid by riot police against moneychangers. Why would they be blamed for the collapse of the currency?

ERDBRINK: Yesterday, President Mahmoud Ahmadinejad gave a press conference and he offered no real solutions other than that he said that America and internal enemies were working hand in hand to bring the rial down. And he specifically mentioned 22 people that in three bands could change the course of the rial at any point they wanted to. And I guess that this was a prelude to the security operation that took place this morning at the moneychangers offices.

INSKEEP: So, blaming the moneychangers for some kind of conspiracy or speculation?

ERDBRINK: President Ahmadinejad is of the opinion that this is a conspiracy against Iran. He was speaking of psychological warfare. And he specifically labeled the moneychangers as being part of, you know, America's attempt in order to bring down the rial. So, this reaction this morning was actually to be expected.

INSKEEP: So, remind us here, what does it mean in ordinary people's lives when their currency, under the pressure of U.S. sanctions apparently, when their currency drops by almost half in a short period of time.

ERDBRINK: Well, I'm actually in a shopping center now and there are no other customers. There's around 10 shops around me. I see shopkeepers sitting on the phone. Frankly, the Louis Vuitton glasses that are sold here in front of me have tripled in price over the last week. The shoes that are brought in by Zyrock have also tripled in price. These people, shopkeepers, they are just watching TV and they are completely miserable. They say we have no future. And this is how normal people feel, too. Their buying power has maybe more than half, has actually gone down so considerably that a lot of people are in state of panic.

INSKEEP: Mr. Erdbrink, thanks very much as always.

ERDBRINK: Thank you.

INSKEEP: Thomas Erdbrink, Tehran bureau chief for the New York Times. This is NPR News. Transcript provided by NPR, Copyright National Public Radio.