Iran financial crisis: rials drops -33% against the US dollar in six months

Tehran: Confused and frustrated Iranians flocked to exchange offices on Tuesday after the government fixed a new rate for the dollar, only to find there were none to buy.

On Ferdowsi Street in central Tehran, home to dozens of banks and currency exchanges, many had hoped to find much cheaper dollars than the day before.

Overnight, the government had announced it was fixing the rate at 42,000 rials per dollar in a bid to arrest a slide in the currency, which has lost more than a third of its value against the greenback in six months.

But all along Ferdowsi Street, exchangers were turning hundreds of people away or had signs up saying: “We have no dollars to sell”, while rate boards showed blank spaces for US and European currencies.

“Last night on TV I heard it’s 42,000 so I came here to buy some for my son who is overseas. I’ve checked every exchanger but I couldn’t find any dollars,” said Tahmoores Faravahar, a 71-year-old retired oil sector worker.

A day earlier, some reported dollars selling at a record-high rate of 60,000 rials — pushed up by fears over tensions with the United States and a difficult political and economic situation at home.

“The truth is that the people can’t trust the word of the government that their money will be safe,” said a trader who sold currency on the street and asked to remain anonymous.

“People don’t have hope in the political and economic situation in this country. People are confused and just want to keep their money safe by turning it into dollars.”

One exchange office said it was never clear when the central bank would deliver dollars for them to sell.

“I don’t know why they haven’t come yet today,” he said in the early afternoon. “But the new rate is good. The price was not normal these last few days.”

Another street trader said the recent currency speculation was driven by the fact that people had few other options to make cash.

“If you look at the market, everything is down except the dollar. Real estate is down, the retail sector is down. People need income so it’s a good idea to buy and sell dollars and make some money,” he said.

“Last night, the government lowered the price and some people had a heart attack, but it won’t stay like this.”

He said exchangers would find ways to fiddle the system to get round the new fixed rate, even though Vice-President Eshagh Jahangiri warned this would be considered smuggling.

“Just like the smuggling of drugs, no one has the right to buy or sell it… If any other exchange rate is formed in the market, the judiciary and security forces will deal with it,” Jahangiri warned on state television.

Some said this had only created fear and confusion.

“I want to sell some dollars but no one wants to buy them because the market is not safe,” said a man in his forties, who did not give his name.

“The exchanges are worried about the situation because the government says it is smuggling if they sell above the new rate, so no one wants to sell,” he said.

Meanwhile, for the many journalists covering the scene at Ferdowsi Street on Tuesday, there was another, unexplained phenomenon.

“There are so many police here, but no one has asked us anything,” said one local reporter.

Other media, including AFP reporters, said it was the first time they had been left to work without even being asked for their papers or being told to move on.

Journalists have felt less pressure since President Hassan Rouhani came to power in 2013, but police routinely hassle reporters and stop them filming in public.

“It’s like a dream,” said one journalist as police walked past his video camera without batting an eye.