Iran arrests illegal money changers after currency slide

Iranian police cracked down on illegal money changers in Tehran on Wednesday, witnesses said, in an apparent bid to halt a dramatic plunge in the value of Iran's currency this week. Unlicenced vendors who usually walk the streets in the capital's central Ferdowsi area buying and selling small amounts of dollars were rounded up and arrested, witnesses said. Tehran's Grand Bazaar, a maze-like complex of shops vital to the city, was also closed and senior uniformed police were present. "We closed because we don't know what is going to happen" in terms of the currency market, one shopkeeper said. The crackdown prompted official exchange bureaux in the district to shutter their premises, one licenced money changer told AFP by telephone. The police action was ordered following a startling, 50 percent dive in the value of Iran's currency, the rial, against the dollar in just a few days. On Tuesday, President Mahmoud Ahmadinejad said Western sanctions were mostly to blame, but rivals said his mismanagement of the economy was the main cause. One money changer said the rial early Wednesday was seen to have stabilised at around 34,000 to the dollar, but stressed that almost no transactions were taking place in the market. Online websites that normally track the currency market were censored, none giving the rial's value against the dollar. On Tuesday, the rial closed at around 36,100 to the dollar.A week ago, it was trading at around 22,000 to the greenback and at 13,000 a year ago. The money's plunge has greatly increased inflation in Iran, which is widely seen as far higher than the official 23.5 percent given by the central bank. Food costs, notably, have spiralled, to the concern of Iranian families. The US government has said it sees the rial's plunge as proof Western sanctions are having a big impact on the Islamic republic's economy. But Ahmadinejad said that, even with the "psychological war on the exchange market," Iran would not be pressured into curbing its nuclear activities -- the stated aim of the sanctions. "We are not a people to retreat on the nuclear issue," he told a news conference in Tehran. "If somebody thinks they can pressure Iran, they are certainly wrong and they must correct their behaviour," he said. Iran, he said, had sufficient foreign currency reserves. Those reserves were estimated at around $100 billion at the end of last year, thanks to surging oil exports. But Iran's oil revenues have been decimated since, because of the sanctions. The US Treasury estimated Iran's foreign earnings have been cut by $5 billion per month.