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Hardline Cleric Calls For Execution Of Foreign Currency Dealers

Iranians stand in front of a bank, hoping to buy U.S. dollars at the new official exchange rate announced by the government, in downtown Tehran, April 10, 2018

One day after Iran introduced a “single rate of exchange” for US dollar, hardline cleric Ayatollah Nasser Makarem Shirazi, better known as Makarem, has called for execution of “a few main foreign exchange dealers”.

Meanwhile, police in Tehran shut down 16 unauthorized money currency exchanges in Tehran and arrested 12 individuals who “disrupted the foreign exchange market.”

Makarem said in Qom on April 11, “we have to pay a price if we do not act proactively.” He suggested “We should execute, according to Islamic rules, a few foreign exchange traders who try to plunge the country into chaos, in order to teach a lesson to others,” Iranian media quoted Makarem as saying.

The comments triggered a wave of mainly negative reactions on social media.

Meanwhile IRGC-linked news agency Tasnim quoted Tehran Police Chief Hossein Rahim as saying that the police have arrested 12 of those who disrupted the order in the forex market.

“In a move in coordination with the Central Bank, Iran’s Cyber space police has summoned a group who disrupted the forex market using the Internet and social media,” Rahimi added.

Speaking to Radio Farda about Iran’s recent announcement of a single rate of exchange, Paris-based economist Fereidoun Khavand said “Influencing the foreign exchange market with a government order or by use of force by the police would be too difficult, if not impossible.”

Grand Ayatollah Naser Makarem Shirazi, undated.
Grand Ayatollah Naser Makarem Shirazi, undated.

Following a steady decline in the exchange rate of the Iranian currency since last September, the rial dropped to 60,000 against the U.S. dollar on Monday, the lowest in history.

Subsequently, The Rouhani administration announced a single rate (4,2000 rial for a dollar) on Monday night, April 9. However, no bank or moneychanger in Tehran has been observed to trade the dollar at this price. Some moneychangers even stopped doing business during the last couple of days.

Meanwhile the government announced that the possession of more than ten thousand Euros or its equivalent in any other foreign currency would be a criminal offense.

The governor of Iran’s Central Bank Valiollah Seyf said on April 11 alongside a cabinet meeting “We have taken a very effective economic measure.”

However, without referring to problems the new policy is facing, Seyf said, “Fluctuations in the forex market have non-economic reasons.”

Vice-President for Economic Affairs Mohammad Nahavandian concurred with Seyf on the “non-economic reasons,” and said in an interview on state TV Tuesday evening April 10, “Fluctuations in the foreign currency market took place because of inappropriate words on social media,” adding that “From now on violating Central Bank regulations would be a criminal offense.”

In the meantime, prominent MP Behrouz Nemati told the Iranian Labor News Agency (ILNA) that the parliament had foreseen the problem and had warned the administration.

Nemati criticized the President Hassan Rouhani’s government for “not speaking with one voice” about the foreign currency problem, as “even officials who have no economic responsibility comment on economic affairs.”

In his interview with Radio Farda, Khavand said that “tensions in Iran’s foreign policy, problems on the way of implementing Iran’s nuclear deal with the West (JCPOA) and the probable withdrawal of the U.S. from the deal are some of the most significant reasons of chaos in Iran’s foreign currency market.”

Another economist, Ahmad Alavi, told Radio Farda that the rise in the rate of exchange in Iran was foreseeable.

“Contrary to promises made by the Central Bank, no change has taken place in the structure of Iran’s economy. So, like always, fundamental problems, such as inflation, people rushing to the market and stockpiling foreign currency and capital flight from the country, have led to the constant rise in the price of foreign currencies,” Alavi said.