A Fistful of Tomans

Kevan Harris on Iran’s Currency Wars

A Tehran restaurant owner recently told me the advice he’d been giving his friends for the last year: ‘Sell your car. Buy dollars.’ Sound counsel, I thought. Exchanging Iranian rials for dollars at the end of 2011 and converting them back nine months later would have yielded enough profit to buy two new cars. Waiting another month would have got you a cheap motorbike too. This sort of ‘street maths’ filters into every conversation. In September a waiter told me he had just sold his stash of $10,000 for a hefty profit. A young woman took her pay cheque to the bank every month and bought dollars with it. In this unofficial currency market the value of the rial dropped nearly 70 per cent in ten months. The frenzied speculation began early last year, after the EU announced it was going to restrict imports of Iranian oil. Government attempts to stem the flight only pushed the rial’s value down further. ‘The Central Bank governor promises on Tuesday to take action, and the dollar goes up on Wednesday,’ a businessman joked. ‘So he reverses his position on Saturday, and the dollar goes up on Sunday.’

Around Ferdowsi Square in central Tehran, currency traders operate from shops and alleyways. Prices are written on blackboards displayed in window fronts. Occasionally a hand appears and erases the rates listed for dollars and gold, invariably replacing them with higher prices. Sometimes the prices are rubbed out and the boards left blank. This means the shop has run out of foreign currency. Eight hundred kilometres away, in the eastern city of Mashhad, moneychangers sit on the bonnets of cars, slapping wads of rials on their palms, calling out the spiralling dollar price to passers-by. I asked one of the young men how he knew what the going rate was, given that there was no central marketplace to verify prices. ‘You have a mobile, don’t you?’ He showed me a text message: ‘3250.’ A week earlier, the rate had been 2800 tomans to the dollar (there are ten rials to the toman). The bottom seemed to have fallen out of the market.

On 3 October, a Wednesday, the government enforced a trading holiday for currency exchanges in the capital and other major cities. The main target was the grey market in Tehran’s Manoucheri Street, where in a bourse housed in a few covered passages millions of units in various currencies changed pockets each day. When the police arrived to lock the gates, arresting several merchants in the scramble, a number of young men jumped on motorbikes and rode to the Grand Bazaar a few blocks away to relay the news. Someone sent a mass SMS message to bazaar shopowners calling them to action. This set off angry demonstrations, which soon spilled onto the streets. Shopkeepers closed their shutters, a few trucks were burned, and if the videos taken on mobile phones are to be believed, anti-Syrian slogans were chanted. As with the unrest following the 2009 elections, when Russia attracted a few barbs, Iranians enjoy flipping the Islamic Republic’s agitprop on its head. Unlike the 2009 Green Movement, however, the Black Wednesday protests included almost no women. Despite the fact that the demonstrators were mostly small-time hawkers and traders, Western media outlets, under the impression that ‘the bazaar’ is still a major hub of Iran’s political elite, concluded – quite wrongly – that a major revolt was kicking off again.

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