Tehran's Grand Bazaar reopens, currency trade still frozen

Tehran's Grand Bazaar reopened under close police supervision on Saturday, traders said, days after it was shut by clashes between riot police and protesters blaming the government for the collapse of the Iranian currency.

Iran's government remained locked in a test of wills with currency dealers as it tried unsuccessfully to impose a stronger exchange rate for the rial, which lost about a third of its value in 10 days.

Merchants in the bazaar, one of the capital's main shopping areas, said uncertainty over whether authorities could stabilise the currency was making business planning difficult.

"The dominant thing on every merchant's mind is concern for tomorrow," one shop owner told Reuters by telephone, declining to be named because of the political sensitivity of speaking to foreign media.

On Wednesday, riot police fired tear gas, fought demonstrators and arrested money changers in and around the bazaar. President Mahmoud Ahmadinejad blamed speculators for the rial's slide, which is eating into living standards and destroying jobs in the industrial sector.

The involvement of the Grand Bazaar in the protests is politically significant because merchants from the area were key supporters of Iran's Islamic revolution in 1979. Some traders said they shut their shops this week as part of the protests, while others cited fears over their safety.

The rial has been undermined by Western sanctions against Iran over its disputed nuclear programme, but many Iranians also blame economic mismanagement by Ahmadinejad's administration.

After the protests, most free market trade of the rial in Tehran and Dubai, a major centre for business with Iran, ground to a halt because dealers feared being targeted by police for quoting rates that displeased the government, and because of the huge financial risks of trading such a volatile currency.

Market frozen

Authorities attempted to revive trade on Saturday by dictating a rate. The Iranian Money Changers Association, a state-licenced body, instructed its members to sell dollars at 28,500 rials, Mehr news agency quoted a trader as saying. That was much stronger than the record low of 37,500 early this week.

But dealers in Tehran and Dubai told Reuters there was almost no trade because the rates indicated by state bodies were not commonly accepted in the market.

Money changers in Tehran "tell us not even to call them to ask the price of currency. They say they are not giving rates," a merchant in the capital said.

The website of SarafiJalali.com, a Tehran-based money changer, said that to comply with the policies of the central bank, it had stopped announcing rates. The firm said it hoped to resume quoting the rial in the future with the permission of the central bank, but did not elaborate.

If the currency market stays frozen, many Iranians may become unable to conduct businesses that involve imports, while foreign travel and study abroad may be curtailed. This could increase discontent with the government.

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