Riot police called out as Iranians step up protests

Police fired tear gas to disperse the demonstrators, angered by the plunge in the value of the rial. Protesters shouted slogans against president Mahmoud Ahmadinejad, saying his economic policies had fuelled the economic crisis.

The rial has hit record lows almost daily as western economic sanctions imposed over Iran’s disputed nuclear programme have slashed the country’s export earnings from oil, undermining the central bank’s ability to support the currency.

Panicking Iranians have scrambled to buy hard currencies, pushing down the rial. With the official inflation rate at about 25 per cent, the currency’s weakness is hurting living standards and threatening jobs.

The government blames speculators for the rial’s collapse and ordered the security services to take action against them. “Everyone wants to buy dollars and it’s clear there’s a bit of a bank run,” said a western diplomat based in Tehran. “Ahmadinejad’s announcement of using police against exchangers and speculators didn’t help at all. Now people are even more worried.”

Close watchers of Iran say the protests pose a threat to Mr Ahmadinejad rather than the government, but his term will end in June when a presidential election is due and he cannot run for a third time.

They expect the government to stop the foreign exchange dealings and pump in money to stabilise the currency and prevent the protests spreading.

Tehran’s main bazaar, whose merchants played a major role in Iran’s revolution in 1979, was closed yesterday, witnesses said. A shopkeeper who sells household goods there said the instability of the rial was preventing merchants from quoting accurate prices.

The protests centred around the bazaar and spread, according to the opposition website Kaleme, to Imam Khomeini Square and Ferdowsi Avenue – scene of bloody protests against Mr Ahmadinejad’s re-election in 2009.

On Tuesday, Mr Ahmadinejad blamed the crisis on the economic sanctions and insisted the country could ride out the crisis. He urged Iranians not to change their money for dollars and said security forces should act against 22 “ringleaders” in the currency market.

The rial’s slide suggested the western sanctions are having a serious impact. On Sunday, Israeli finance minister Yuval Steinitz said Iran’s economy was “on the verge of collapse”.

Many businessmen and ordinary citizens say the government is at least partly to blame for the currency crisis, and Mr Ahmadinejad has been criticised by opponents in parliament.

The rial has lost about two-thirds of its value since June 2011. Its losses accelerated in the past week after the government launched an “exchange centre” to supply dollars to importers of basic goods; businessmen say the centre failed to meet demand for dollars.

Parliamentary news agency ICANA quoted Mohammad Bayatian, a member of parliament’s industry and mines committee, as saying enough signatures had been collected to call Ahmadinejad to parliament for questioning over the rial’s fall.

Meanwhile, on Monday university students protested in front of parliament against a lack of government-subsidised dollars for their studies abroad.