Iranian riot police move in as protesters set garbage on fire near the old main bazaar in the center of Tehran, Iran, on Wednesday.
Riot police clashed with demonstrators and foreign exchange dealers in Tehran on Wednesday over the collapse of the Iranian currency, which has lost 40 percent of its value against the dollar in a week, witnesses told Reuters.
Police fired tear gas to disperse demonstrators angered by the plunge in the value of the rial. The protesters shouted slogans against President Mahmoud Ahmadinejad, saying his economic policies had fueled the economic crisis, Reuters reported.
The rial has hit record lows against the U.S. dollar almost daily as Western economic sanctions imposed over Iran's disputed nuclear program have slashed the country's export earnings from oil, undermining the central bank's ability to support the currency.
Panicking Iranians have scrambled to buy hard currencies, pushing down the rial. With Iran's official inflation rate at around 25 percent, the currency's weakness is hurting living standards and threatening jobs.
The Iranian economy is in free-fall with its currency, the rial, hitting a record low. NBC's Ali Arouzi reports.
The government blames speculators for the rial's collapse and ordered the security services to take action against them.
NBC News correspondent Ali Arouzi – one of the few Western journalists allowed in Tehran – said the protests were "unusual" but "not likely to spread into wider disorder."
He said: "Authorities here respond very quickly to prevent public disorder. The currency situation here is very difficult for everyone but at the moment this seems to be a dispute between angry currency dealers and the authorities in one part of Tehran.
"People take their savings to these currency dealers to get them converted into more stable U.S. dollars, which has been one of the factors in the weakening of the rial. The dealers are unhappy that their businesses have been shuttered."
BBC journalist Mehrzad Kohanrouz posted on Twitter a link to a video clip that appeared to be of demonstrations in Tehran, while a U.K.-based human rights activist posting on Twitter as "Zealous Iranian" published two pictures that he told NBC News were taken by witnesses at the scene of the disturbances. None of the social media material could be independently verified by NBC News.
Tehran's main bazaar, whose merchants played a major role in Iran's revolution in 1979, was closed on Wednesday, witnesses told Reuters. A shopkeeper who sells household goods there told Reuters that the instability of the rial was preventing merchants from quoting accurate prices.
The protests centered around the bazaar and spread, according to the opposition website Kaleme, to Imam Khomeini Square and Ferdowsi Avenue – the scene of bloody protests against Ahmadinejad's re-election in 2009.
Protesters shouted slogans like "Mahmoud the traitor – you've ruined the country" and "Don't fear, don't fear – we are all together," the website said.
Currency at record low
The national currency dove to a record low on Tuesday to 37,500 to the U.S. dollar in the free market, from about 34,200 at the close of business on Monday, foreign exchange traders in Tehran said. On Monday last week, it traded at around 24,600.
Ahmadinejad on Tuesday blamed the crisis on the U.S.-led economic sanctions on Iran and insisted the country could ride out the crisis. He urged Iranians not to change their money for dollars and said security forces should act against 22 "ringleaders" in the currency market.
The rial's slide suggested the Western sanctions were having a serious impact. On Sunday, Israeli Finance Minister Yuval Steinitz said Iran's economy was "on the verge of collapse."
The rial has lost about two-thirds of its value since June 2011. Its losses accelerated in the past week after the government launched an "exchange center" to supply dollars to importers of basic goods; businessmen say the center failed to meet demand for dollars.
At the Dubai Creek, a crowded waterway from which motorized dhows ship goods to Iran, merchants said Iranian business had fallen off dramatically in the last two weeks.
"Everyone is losing; traders from Iran are losing because of the depreciating rial, and we're losing here because Iranians can't afford to buy our products anymore," said Ahmed Mohammed Amin, 53, an Iranian trader who has lived in Dubai for 40 years.
Reuters and NBC News' Ali Arouzi and Alastair Jamieson contributed to this report.
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