The Latest from Iran (2 October): A Currency in Free Fall?
Tuesday, October 2, 2012 at 8:43
The scene in the Tehran currency market today
See also Iran Audio Feature: Can Iraq Stop Tehran Flying Weapons to Syria? --- Scott Lucas with Monocle 24
Monday's The Latest from Iran (1 October): Can the "Resistance Economy" Continue to Resist?
1929 GMT: Ahmadinejad Statement of the Day. An EA correspondent draws up an important segment from the President's press conference, in which Ahmadinejad effectively said "Back Me or Sack Me": "I was somewhere and said, 'If you want me to, I'm ready to write a sentence, and we go away.'"
Our correspondent explains, "'Somewhere' is the Supreme Leader's house or office." amd looks at the 2:24 mark in this video to assess, "Ahmadinejad has definitely threatened to step back if necessary."
1812 GMT: Currency Watch. Reuters highlights an extract from President Ahmadinejad's press conference in which --- absolving his Government of responsibility --- he blamed enemies within as well as without for the currency crisis and economic problems: "Enemies have managed to reduce our oil sales but hopefully we will compensate for this....According to a report from one of the security services, 22 individuals are ringleaders of the recent turmoil in the currency market, and since these individuals are known, security institutions must act."
1643 GMT: Currency Watch. Ahmad Karimi Esfahani, the head of Bazaar guilds, has said the Government is "incapable" of taking any decision about curremcy market.
Esfahani said the Central Bank's "trade room", launched last week to provide foreign exchange at a small discount from the open-market rate, had not helped the situation.
1635 GMT: Press Watch (Prison Edition). The United Nations Human Rights Commission has called for the immediate release and end of harassment of prominent activists and journalists from prison.
Spokesman Rupert Colville said, "The ongoing arrest and detention of media professionals and intimidation of media organizations is deeply worrying, especially given we are now entering the run-up to the June 2013 Presidential elections. We urge the Government of Iran to promptly release all those who have been arrested for peacefully exercising their fundamental rights."
Colville expressed concern about human rights lawyer Mohammad Ali Dadkhah, summoned to prison last week to serve a nine-year sentence for his leading role in the Center for Defenders of Human Rights, and he cited other cases from Ali Akbar Javanfekr, President Ahmadinejad's aide and head of the State news agency IRNA, to Reuters Bureau Chief Parisa Hafezi.
Colville also referred to the detention in late September of Faezeh Hashemi and Mehdi Hashemi, the daughter and son of former President Hashemi Rafsanjani.
1617 GMT: Headline of Day. Khabar Online's summary of the President's news conference is covered by our collection of take-away lines (see 1410 GMT), but it deserves mention for its headline, "Ahmadinejad Warns of Enemies' Psycho War against Iran".
1611 GMT: Political Prisoner Watch. Labour activist Ali Nejati has reportedly been released from prison.
Nejati was arrested in March 2009 and charged with "actions against national security".
1547 GMT: Currency Watch. Did Iran's security fofces arrest currency traders today to stop the slide of the Rial?
Tehran Police Chief Ahmad Reza Radan said officers are "currently active over dollar and currency troubles" and that he will report in time on their activities.
Iran Police Chief Esmail Ahmadi Moghaddam adds another piece of information: the Prosecutor General released "currency defrauders" after the NAJA police branch had arrested them. Ahmadi-Moghaddami added, "We need better laws" for the situation.
1537 GMT: The Battle Within (cont.). And here's another sign of trouble for the President....
Before Ahmadinejad's televised press conference, Speaker of Parliament Ali Larijani took aim at the Government's programmes such as subsidised housing: "The economy does not work with 'Robin Hood-style' methods."
Larijani repeated his assertion --- colliding with Ahmadinejad's assertion that external factors rather than the Government were responsible for difficulties --- that economic problems are "20% sanctions" and the rest are due to mismanagement.
1530 GMT: The Battle Within. Forget the Ahmadinejad press conference, this may be the most incisive remark of the day....
A senior Iranian military commander has rejected reestablishment of relations between Tehran and Washington as being against the principles of the Islamic Revolution and people’s demands.
Addressing a group of high-ranking officials, Iranian Armed Forces Chief of Staff Major General Seyyed Hassan Firouzabadi said the idea of detente with the US is the result of occasional disregard for “the ideals of Imam [Khomeini]” by some officials.
The Iranian commander reiterated the remarks made by Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei, who ruled out any relations with the US unless Washington “comes to its senses".
“Today, US officials have shown that they are enslaved by Zionists, super-capitalists and the British Freemasons,” Firouzabadi added.
So who are the "some officials" whom Firouzabadi is slapping down with his comments? Well, President Ahmadinejad included only last week in New York that he would welcome a resumption of talks with the US on issues such as Iran's nuclear programme.
1410 GMT: Ahmadinejad Watch. Take-away lines from the President's press conference....
On the currency crisis: "Dear people, just wait a bit. Don't bother, if you cannot buy foreign spoons and forks for now... Have patience, and all of it will get fixed."
On his flagship economic programme: "What do subsidy cuts mean? In two words: taking from those who have and giving it to those who have not."
On politics: "Ahmadinejad is the only one that you can criticise. Tell me with whom else you can do that?"
On the press: "The ban on Shargh newspaper was a fault committed by my Culture Minister in my absence."
On America: "I did not propose talks with USA."
Journalist Reza Asadi adds, "Ahmadinejad is attacking every official in the Islamic Republic in his presser like a wounded tiger. Roasted Revolutionary Guards several times."
1330 GMT: Currency Watch. The yo-yoing of the Rial continues --- Mesghal puts the current rate at 35500:1 vs. the US dollar.
1320 GMT: Currency Watch. President Ahmadinejad is holding his press conference, telling journalists that the economic situation is not the Government's fault but should be attributed to sanctions and the "enemy's psychological war".
Minister of Economy Shamseddin Hosseini will answer questions on State broadcaster IRIB tonight about the currency crisis. Meanwhile, 13 experts on the economy have warned the Government of a "currency tsunami".
1314 GMT: All-is-Not-Well Alert. Prominent political analyst Sadegh Zibakalam has offered his thoughts on the current situation: "In wartime, conditions were better than today --- people have no right to protest and ruling factions take revenge on each other."
The Tehran University academic continued, "People are insulted and angrh. The government's mistaken foreign policy has caused economic and political shortcomings."
1300 GMT: Ahmadinejad Watch. MP Mohammad Bayatian, a member pf the Industry Committee, has claimed that the required number of signatures have been gathered on a petition to interrogate the President about the currency situation.
Deputy Speaker of Parliament Mohammad Reza Bahonar has implicitly warned Ahmadinejad not to interfere over the six-month prison sentence of Presidential aide Ali Akbar Javanfekr: "No organisation can intervene in the case but can act only via legal channels."
Javanfekr, the editor of Iran newspaper, was summoned to prison last week over an issue of the publication which allegedly insulted Islam. Ahmadinejad reportedly said he would approach the Supreme Leader about the case.
1235 GMT: Currency Watch. Following our earlier report of wide differences in reports on the state of the Rial, Mehr gives a possible explanation --- it says there have been sharp fluctuations in the Rial's value today, as it weakening to 36500:1 vs. the US dollar and now has rebounded to 32600:1.
Baztab gives an even larger swing from 40000:1 to 32600:1, indicating the Rial's bounceback came after the Central Bank injected foreign currency into the market.
1113 GMT: Protest Watch. The Associated Press reports on a petition, with 10,000 names, complaining to Minister of Labor Abdolreza Sheikholeslami about economic conditions: "A staggering increase in prices has been biting over the past year as wages of workers have only increased 13 percent this year....Millions of workers cannot afford their monthly housing costs."
.1110 GMT: Currency Watch. Deputy Speaker of Parliament Mohammad Reza Bahonar has rejected a rumour that the Government is devaluing the Rial to help cover its Budget deficit. He assured that there is no shortage in foreign exchange and that the Bazaar can be provided with amply supply.
1059 GMT: Currency Watch --- Who's Telling the Truth? We noted a few minutes ago that currency websites Mesghal and Mazanex are reporting a 5% strengthening of the Rial today to 33200:1 vs. the US dollar on the open market.
However, Khabar Online, linked to Speaker of Parliament Ali Larijani, has a far different story. It claims the Rial is moving at 39000:1, a further decline of more than 12% on top of Monday's 16% fall. The website posts a photo to back up its claim.
Journalist Thomas Erdbrink sent a brief message that the rate in Tehran markets is 37500:1.
1053 GMT: Press Watch. The daily newspaper Maghreb has been warned by the Press Council to exercise tighter supervision over its content, after its offices were raided and its editor questioned on Monday.
The cause of the warning is unclear, although rumours circulated that Maghreb had transgressed by published a photo of either former President Khatami or former President Rafsanjani.
1050 GMT: Ahmadinejad Watch. Iranian media report that President Ahmadinejad will hold a press conference this afternoon on domestic and international issues.
1045 GMT: Currency Watch. Back from an academic break to find both Mesghal and Mazanex reporting a halt to the slide of the Rial.
Both sites post a rate of 33200 Rials to the US dollar, a strengthening of almost 5% after the sharp drop of more than 40% over the past week.
0750 GMT: Currency Watch. A telling first-hand remark from inside Iran....
"M. Ali" is a frequent contributor to Race for Iran's comment section, and occasionally to EA under another name. Up to now, he has dismissed talk of serious economic problems as exaggeration by those seeking to undermine the regime, but overnight he has posted:
The current currency crisis is a big worry to me. If the government can’t burst the currency bubble soon (and so far, it is a bubble) then many business will close down and if it is prolonged, and the bubble suddenly bursts, then a lot of people will lose their life savings, and if it doesn’t burst, then the rial will be valueless and will have a hyperinflation like Zimbabwe.
My own savings have been reduced by 1/3rd in an extremely short time and I refused to convert it to dollars for ideological reasons, but I wonder how long I can hold out, as I am as human as the next person.
This is depressing me, and a part of me feels like we gave them (the west) a good run for their money, and after struggling for 30+ years, we might finally have lost…
0745 GMT: Currency Watch. And now signs of tension within the regime over the deteriorating situation....
Fars, linked to the Revolutionary Guards, headlines an interview with Ministry of Industry Mehdi Ghazanfari. He says that this is "not only an economic issue" but one with security, political, and cultural dimensions, and he complains, "Unfortunately the relevant authorities are not very active."
0655 GMT: Currency Watch. The currency site Mesghal.com is back on-line but has not updated its information from Monday.
Alef, however, posts a rate of 35400 Rials to the US dollar, a weakening of more than 2% from Monday's 34700:1. The site also says new gold coin is now priced at 13.8 million Rials (about $1100), a surge of more than 35% in a week.
Khabar Online reports that the Central Bank will maintain Sunday's rate of 26720 Rials to the US dollar in its "trade room" for importers and other selected customers, despite the 16% fall in the Rial on the open market on Monday.
Initially the Central Bank had set the Rial at a 2% rate stronger than its open-market level, but that gap is more than 30%.
Minister of Industry Mehdi Ghazanfari has said that exchange offices may provide currency at the "trade room" rate for "small demands".
0645 GMT: Press Watch. There is not a hint from State news agency IRNA about the currency situation. Its lead stories this morning --- "Western Companies Should Be Punished for Helping Saddam's Chemical Weapons Programme", "Good Relations with Tehran --- Tbilisi is a Model for the Region", "Foreign Ministry Rejects Claims of American and the Persian Gulf Cooperation Council", and President Ahmadinejad's interview with Charlie Rose on US television.
And in the Economic Section? IRNA talks about the Central Bank's new "trade room", which offers foreign exchange at a small discount on the open-market rate to importers and other selected customers, without ever mentioning the state of the Rial vs. the US dollar.
In contrasst to IRNA, Mehr is reporting an open-market rate of 34000 to 35000 Rials per US dollar this morning, roughly the same as Monday's closing level.
0455 GMT: There is no doubt about today's lead story. Even international news outlets who think of "Iran" as the nuclear programme and possible war with Israel set these aside on Monday for the economic shock of the free fall of the currency.
By the end of Monday, currency websites such as Mesghal and Mazanex set the Iranian Rial at 34700:1 vs. the US dollar on the open market, a drop of 16% on the day and more than 40% on the week, with some Iranian media reporting the currency hitting the 35000:1 mark.
Already this morning there are indications beyond the numbers of the seriousness of the problem. Reports indicate that Tehran's major foreign exchange offices were closed early on Monday, and the opposition website Kalemeh is claiming that parts of the Bazaar were shut. One of Mesghal's currency websites has been "Account Suspended" since Monday morning; the other cannot be contacted this morning. Mazanex has suspended the posting of a dollar rate for the Rial.
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