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Tehran’s Grand Bazaar Goes On Strike As Iran’s Economic Crisis Worsens

Vendors in Tehran's Grand Bazar closed their shops in protest to rising exchange rates and the economic downturn, on Monday, June 25, 2018.
Vendors in Tehran's Grand Bazar closed their shops in protest to rising exchange rates and the economic downturn, on Monday, June 25, 2018.

Store owners at Tehran’s Grand Bazaar closed their shops Monday morning, June 25, in protest to the dramatic rise in the rate of exchange of foreign currencies that have adversely affected the market and made prices unaffordable for buyers.

The move came one day after strike and protests broke out at Tehran’s cell phone market.

According to semi-official Fars news agency, traders in the bazaar staged a protest gathering in the traditional Grand Bazaar in downtown Tehran and “protested against recession, fluctuations in the rates of exchange for foreign currencies, declining demands and rising prices.”

Videos released on social media show demonstrators chanting slogans against the rising prices and Iran’s involvement in the Syrian civil war. “Leave Syria alone, think of our own,” the demonstrators chanted.

In the meantime, as the rate of exchange for US dollar reached a record high of 90,000 rials per dollar after a 10,000 hike within a day, the Iranian government announced plans that would set three different rates of exchange for dollar.

The ambiguity in the announcement about multiple rates appears to have added to the chaos in the Iranian markets.

Central Bank Governor Valliollah Seyf has announced plans to launch “a second forex market,” operating based on three different rates of exchange. “The rate for importing essential commodities including medicine would be 42,000 rials, while importers and exporters will have to agree on the rate for importing non-essential goods,” Iranian media quoted Seyf as saying.

Mehr news agency reported that the decision was made at a meeting between President Hassan Rouhani and his cabinet’s economic ministers on Sunday.

Meanwhile, Iranian Students News Agency ISNA, which is close to the Rouhani administration, reported on Monday, that a third rate of exchange between 60,000 to 65,000 rials per US dollar will be also announced soon.

Other officials have told reporters about other rates, adding to the state of confusion and ambiguity in the markets, reports by ISNA and Mehr news agencies say.

The Rouhani administration had promised to come up with a single rate of exchange for dollar and in March 2018 introduced the new rate of 42,000 rials per dollar, which the market simply ignored and several reports from Iran said that banks were not able to provide foreign currency to traders and passengers at this rate.

Iranian media say unofficial foreign exchange traders have stopped buying and selling dollars and others currencies since Sunday, June 24.

The Rouhani administration officials insist that there are no economic reasons for the rise in prices. The administration’s spokesman, Mohammad Baqer Nobakht, however, says “the rise in the rate of exchange is due to a rise in demands as people are interested in converting their assets into US dollars,” Iranian media quoted him as saying.

In the meantime, further reports from Tehran say the closure of the bazaar started from the garments market and soon spread to other markets including the relatively more modern marketplace for home appliances.

During the previous day, traders at Tehran’s cell phone markets went on strike and took part in a protest demonstration which was also joined by buyers at the market.

Traders at the Tehran forex market as well as economic analysts abroad have said that the rise in the value of US dollar against the Iranian currency rial, which has led to a dramatic rise in prices across Iranian markets, are linked to political developments such as the US withdrawal from the nuclear deal with Iran, the resumption of sanctions against Iran and the ambiguous future of the nuclear deal, also called the Joint Comprehensive Plan of Action (JCPOA).

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