Hundreds of protesters have clashed with police in Tehran after the government attempted to stop the Iranian currency plummeting in value by cracking down on speculators, beginning with the city's black-market money changers.
The sprawling Grand Bazaar, whose merchants were instrumental in the overthrow of the Shah in 1979, was closed as traders shut their shops in solidarity with the currency traders, and called for government action to head off an economic collapse.
The riots were a sign that Western sanctions aimed at halting Iran's nuclear programme are taking their toll on the economy, and signal the most serious civil unrest in over a year.
In the past week alone, the rial, which has steadily devalued over the year, has fallen by 40 per cent, hitting a record low of 37,500 to the dollar on the free market. It was trading at around 24,600 last Monday, and early last year, was trading closer to 10,000. Trading in the currency was halted yesterday.
"Everyone wants to buy dollars and it's clear there's a bit of a bank run," a Western diplomat in Tehran told Reuters. "[Iranian President Mahmoud] Ahmadinejad's announcement of using police against exchangers and speculators didn't help at all. Now people are even more worried."
Police used tear gas and batons to disperse protesters, who branded Mr Ahmadinejad a "traitor" for fuelling the crisis with poor economic decisions. Witnesses described motorcycle chases in the area around Manoucheri Street, where most of the money changers are based. The area has been thronged with people desperate to swap rials for dollars in the past week.
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