Iran 1st-Hand: Life in the Time of a Currency Collapse (Erdbrink)

Thomas Erdbrink reports from Tehran for The New York Times:

....In the Iranian capital, all anyone can talk about is the rial, and how lives have been turned upside down in one terrible week. Every elevator ride, office visit or quick run to the supermarket brings new gossip about the currency’s drop and a swirl of speculation about who is to blame.

“Better buy now,” one rice seller advised Abbas Sharabi, a retired factory guard, who had decided to buy 900 pounds of Iran’s most basic staple in order to feed his extended family for a year.

“As I was gathering my money, the man received a phone call,” said Mr. Sharabi, smoking cigarette after cigarette on Thursday while waiting for a bus. “When he hung up he told me prices had just gone up by 10 percent. Of course I paid. God knows how much it will cost tomorrow.”

While only a few people actually need to exchange the rial for foreign currency, its value is one of the few clear indicators of the state of the economy, and its fall has sharply raised the prices of most staples.

In Tehran, many residents spend their days calling on money changers and visiting banks, deliberating whether to sell their rials now or wait for a miracle that would restore the rates to old levels, or for even a modest rally from the panic-driven lows of the last week.

“The fluctuations are so large that nobody knows whether it is better to wait or to change now,” said Ahmad, 65, as he shared a taxi to the west Tehran neighborhood of Sadeghiyeh. “I am so fed up,” said Ahmad, a garment seller, who like others here did not want to be identified by his full name for fear of retribution from the authorities. “I want to have a normal life, but from breakfast, to lunch to dinner, everybody only nervously talks of hard currency.”

Like many residents of the capital, Ahmad had tuned in to President Mahmoud Ahmadinejad’s news conference on Tuesday, hoping that he would offer some sort of solution.

Instead, Mr. Ahmadinejad attributed most of the rial’s weakness to currency speculators and the sanctions, saying that it is only natural that the currency should suffer when it is possible to sell oil only in small quantities and when it is hard to make international bank transfers. His opponents say he is trying to avoid blame for his own mismanagement of the economy. He even went so far as to threaten to quit.

“He has made a mess, and now he wants to leave us,” Ahmad said of the president. But a passenger in the taxi named Mostafa interrupted. “No,” he said, “most of our leaders are at fault, but they are trying to blame everything on Ahmadinejad.”...

For Maysam, the son of a man who was killed in the Iran-Iraq war, a decade of relative prosperity and technological innovations had enabled him to travel widely and had turned him into a prominent blogger and critic of the system that his father had died defending. Instead of hoping to die on a battlefield, he had planned to run his own Internet start-up company.

But those dreams have been shattered. “We can’t even think of the future, of tomorrow, the day after, or the next week,” Maysam said. Foreign trips are out of the question, as even the price of a cup of coffee in Dubai, United Arab Emirates, or Istanbul — favorite destinations for Iranians — has tripled when calculated in rials. Parents of the legions of Iranians studying abroad are calling their children back to Iran, as rents and college fees in countries like the Philippines and Malaysia have become unaffordable.

“I have told my son to come home,” said Shabaz, 60, who is part owner of a printing house, adding that he had spent his life encouraging his son and daughter to study abroad. “We are all losing. His future is gone; I won’t ever witness his graduation; and he won’t find a job.”

Among the country’s Afghan community, a mix of refugees and guest laborers, some were debating whether to leave Iran. Their currency, the afghani, had gained considerably against the rial, effectively slashing their already meager wages.

After risking his life to get to Iran from Afghanistan, Amin, 18, had thought he was lucky to find a job sweeping the floors of an expensive Tehran apartment building. Now, he said he felt as if he were working for free. “I can make more money working in Afghanistan,” he said shyly, turning his face away. “The people are good to me here, but I have to think of my family back home.”

Mitra, 47, had just returned from the dance class she teaches several times a week and was getting ready to head out for the dress shop that she runs with her husband. Her eyes welled with tears when she heard the rial’s latest rates.

“My only hope is to get my 23-year-old son out of this place,” she said. She had been trying to get him into Canada, where hundreds of thousands of Iranians live, but the Canadian Embassy closed last month. Now, she said, they would have to go to Ankara, Turkey, for his visa interview. “But if he manages to go, it will be worth every cent I have,” she said.

At Tehran’s currency market, traders quietly started buying and selling again after the raid on Wednesday, though few people were willing to part with dollars. While government officials announced that the rial would strengthen as soon as they had their own foreign currency exchange center up and running, many traders were skeptical.

“It all comes down to this,” said a trader named Akbar. “As long as sanctions continue, the rial will continue to lose value.”

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