The Latest from Iran (21 October): How High Is the Rate of Inflation?

See also The Latest from Iran (20 October): "We Will Not Surrender"

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1955 GMT: About 1,000 workers of the Entekhab group have staged a demonstration at the South Korean Embassy in Tehran after an acquisition deal with Daewoo Electronics collapsed because of sanctions.

The demonstrators called for return of a downpayment of $70 million by Entekhab in 2011 to Daewoo, company spokesman Hamid Ghaznavi said.

In November 2010, Entekhab Industrial Group signed a contract for its acquisition of South Korea's Daewoo Electronics for $518 million. Daewoo Electronics, a former subsidiary of the now-defunct Daewoo Group, has been under a debt rescheduling programme since 1999 when its parent company collapsed.

Entekhab is located in the central province of Isfahan and produces appliances such as refrigerators, washing machines and televisions under the brand names Snowa and Haier.

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Iran Feature: "Economic Crisis Shaking Foundations of Social Order" (Khajehpour)

The current crisis is shaking some of the basic foundations of social order. The society as a whole, particularly the youth have no confidence in government, law and in clerical institutions. This loss of confidence translates into social behaviors such as disregard for the law, disrespect of cultural norms etc. which will further irritate Iranians with long-term consequences.

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Iran Feature: A Middle Class on Edge (Worth)

>One measure of the profound anxiety now coursing through Iranian society can be seen on Manouchehri Street, a winding lane at the heart of this city where furtive crowds of men gather every day like drug dealers to buy and sell American dollars.

The government has raised the official exchange rate and sent police into the streets to stop the black marketeers, but with confidence in Iran’s own currency, the rial, collapsing by the day, the trade goes on.

“Am I afraid of the police? Sure, but I need the money,” said Hamid, a heavyset construction engineer who was standing by a muddy patch of greenery amid a crowd of other illicit currency traders here. “Food prices are going up, and my salary is not enough.” Glancing nervously around him, he added that he had converted almost all of his assets into dollars. Like many Iranians, he had also stockpiled months’ worth of rice and other staples.

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Iran Snap Analysis: Are the Oil Sanctions Tightening on Tehran?

We already knew about the US effort to persuade Japan and South Korea to reduce their supply of oil from Iran. What is striking now is the inclusion of China. Officially, Beijing is taking the firm stance that it will not agree to any stiffened sanctions. We have suspected that, behind the scenes, the Chinese might be more accommodating to a reduction of their imports from the Islamic Republic.  The New York Times observes, "This weekend [China's] prime minister, Wen Jiabao, will begin a five-day visit to Saudi Arabia, Qatar and the United Arab Emirates, perhaps to explore the prospect of increased energy imports."

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Iran 1st-Hand: How the Currency Crisis Began (Chenar)

The first sign of trouble appeared in the gold market. There has always been a strong demand for gold and gold coinage in Iran, as Iranians have traditionally saved in the precious metal. "I never lose money buying gold," said Simin, a 50-year-old retired teacher and mother of four grown children. "Even during the war, I registered for Bahar-e Azadi coins [the Islamic Republic's official gold coins]. They are easy to hide and easy to trade. When I need cash, all I need to do is go into the first jewelry store and sell them at market price." Few became alarmed as gold prices began to increase in Tehran; after all, the gold market was on the upswing globally. According to an economist at the Central Bank of Iran (CBI), "Gold was rising everywhere, and it was only natural to see prices increasing in Tehran. Although sometimes the price of gold in Tehran was more expensive than its price in the global market, sometimes it was lower."

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The Latest from Iran (5 January): Shaky Currency, Desperate Measures, and An Outright Lie

See also Iran Feature: Is Ahmadinejad's Government Fuelling the Currency Crisis?
The Latest from Iran (4 January): If You Yell Victory, Does It Count?

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Tehran Times: All is Well2110 GMT: Ahmadinejad Watch. Pro-Ahmadinejad State news agency strikes a very different note on the visit of Turkish Foreign Minister Ahmet Davutoğlu (see 2100 GMT). Forget all the chatter about nuclear talks; IRNA's concern is the President's declaration on "the need for vigilance against the intrigues of the enemies of humanity".

2100 GMT: Foreign Affairs (Turkish Front). Back from a break to look through reports of today's meetings in Tehran between Foreign Minister Ahmet Davutoğlu and Iranian officials, including President Ahmadinejad and Foreign Minister Ali Akbar Salehi....

Davutoğlu's headline announcement was that he had delivered a "Western" offer to resume talks on Iran's nuclear programme and that Salehi had accepted: "We are waiting for a good result coming out of the willingness of the two parties to go back to the negotiating table."

Salehi confirmed that Iran was ready to return to talks "at a time and place agreed by both sides".

However, a European official said Iran had still yet to formally accept a new meeting in writing: "We still await [Iran's] response to [European Union High Representative Catherine] Ashton's letter of October. We are open to talks on confidence-building measures without preconditions....But it's up to Iran to respond in writing."

Iranian media such as ISNA and Press TV are highlighting Salehi's declaration that Iran is "ready for negotiation".

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The Latest from Iran (4 January): If You Yell Victory, Does It Count?

See also Iran Feature: Explaining the Currency Crisis
Iran Snap Analysis: After the Show of Ships and Missiles, Regime Declares, "We've Won!"
The Latest from Iran (3 January): Desperately Seeking Reformists

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2145 GMT: Foreign Affairs (Turkish Front). Turkish Foreign Minister Ahmet Davutoğlu has made an unexpected trip to Tehran today, briefly meeting his Iranian counterpart Ali Akbar Salehi.

No details of the discussion or of the agenda were given in Mehr, which said only that Davutoğlu would be meeting Iranian officials tomorrow.

2045 GMT: Currency Watch. Amidst the currency crisis, the Central Bank has ordered a decrease in the amount that can be exchanged under a preferential "traveller's rate" from $2000 to $1000.

Under the "traveller's rate" of about 13000:1, the Iranian rial is weaker than the official rate of 11800:1 but still stronger than the open market rate of 15700:1, thus enabling Iranians going abroad to get more US dollars or foreign equivalents for their Iranian currency. Iranians can carry out the transaction once a year.

(Hat tip to Moandor, who provided information earlier today and predicted the Central Bank would soon take a step over the traveller's rate in .)

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Iran Feature: Explaining the Currency Crisis (Naghshineh-Pour)

Central Bank Head Bahmani & President Ahmadinejad The Central Bank is losing its battle with the local Iranian gold and foreign exchange markets. Central Bank governor, Mahmoud Bahmani, has been struggling futilely with market forces for a few months now, to prevent potentially profound devaluation of the Iranian rial. For years monetary policy has been based on clutching the rial against the USD despite double digit inflation and directive bank deposit rates lower than the rate of inflation. It seems that at last people are losing their confidence with the rial and exchanging their rial based capital to non-rial liquid asset classes such as gold and foreign currencies to safeguard their resources.

The reasons for this devaluation may be sought in four serious immediate threats to Iran's economy.

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Iran Snap Analysis: Finding a Scapegoat in the Currency Crisis

Head of Central Bank BahmaniTucked in amongst Press TV's assurances of Iran's military and economic strength --- "Iran successfully test-fires Nour missile"; "Israel can cease to exist if Iran attacked" --- is a brief but telling story, "CBI hibernates as Iran rial slides":

Despite a steep rise of the US dollar's parity against Iran's national currency in the unofficial market, the Central Bank of Iran (CBI) has yet to announce a clear policy to assuage the foreign exchange market.

As the business day started in Tehran on Monday, every dollar was traded for IRR16,400, which rapidly rose to IRR 17,000 by early afternoon. 

Meanwhile, the CBI has announced the official exchange rate of the US dollar as being IRR 11,180 on its official website. 

The State news agency IRNA is still not breathing a word about the currency crisis --- instead, its lead story is "California's massive protests against capitalism" --- so what explains the sudden admission by Press TV?

The clue may lie in the headline. If the crisis cannot be hidden, given that other Iranian newspapers as well as international media are now on top of the developments, then a culprit has to be prepared. That won't be the Supreme Leader, of course, and President Ahmadinejad seems to be exempt. Even the Ministry of Economy, Shamseddin Hosseini, who has been under pressure in the Parliament, is not mentioned.

Instead, it is the Central Bank and its head, Mahmoud Bahmani, who can take the blame. Even though Bahmani has been far from inactive --- it was his intervention, through a statement to a Parliamentary election, that brought a short-lived halt to the rial's fall two weeks ago --- he and his staff can be accused of "hibernation". They are dispensable.

Of course, Bahmani's eventual removal will not solve any of the big issues about the currency and the economy, but the hope is that it will buy some time for a solution to suddenly appear. If it does not, then the politics get really interesting: when the scapegoat is gone, who is next? 

The Latest from Iran (13 November): Sanctions, Talks, and a Twist on Iraq

1838 GMT: Economic Revelation of Day. Minister of Welfare and Social Security Sadegh Mahsouli has explained that Iran cannot define a poverty line due to huge differences between rural and urban areas, although the Government "does everything to distribute national wealth".

Fun Fact: Sadegh Mahsouli is a millionaire.

1835 GMT: Subsidy Cuts Watch. Arsalan Fathipour, the head of Parliament's Economy Commission, has said that the Majlis has no information on the government's "support packages" to ease the economic pain of the cuts.

1830 GMT: Soft War is Everywhere! It's in the pulpits: Kalemeh claims an official order has been sent to Friday Prayer leaders for the holy month of Muharram (December/January), telling them to explain the 2009 "fitna" (sedition) and informing people about the soft war.

And it's on the easels: Minister of Culture Mohammad Hosseini has declared that artists are "front commanders" in the soft war.

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