Maryam Rahmanian/UPI/Landov
An Iranian man checks the rates of foreign currencies at a currency exchange bureau in central Tehran on Sept. 29. The Iranian currency lost nearly one-third of its value in a day over the weekend.
Large crowds of anxious Iranians gathered in Tehran on Sunday and Monday at foreign exchange offices — some of which had shuttered their doors — as Iran’s currency continues its free fall.
From Sunday to Monday, the rial lost nearly one-third of its value against the dollar — and the decline appears to have continued Tuesday.
Most economists say it’s the very tough economic and banking sanctions against Iran, as well as an embargo on Iranian oil sales, that are responsible for the currency collapse. Iran’s government is blaming currency speculators and what it’s calling “defrauders.”
The currency exchanges closed because traders had run out of dollars, which caused more panic among ordinary Iranians, says Hossein Askari, an expert on the Iranian economy who teaches at George Washington University.
“Cab drivers in Tehran are turning in their rials for dollars, because they say to themselves, it’s better that we do it now than wait until tomorrow,” Askari says. “And if that mentality takes hold, it’s over.”
The panic and blame game are adding to the pressure that weakens the rial even more, says Djavad Salehi-Isfahani, a professor of economics at Virginia Tech.
“When a situation like this happens, people who need dollars now will have to buy at a very high rate, because others are basically hoarding their dollars,” Salehi-Isfahani says.
It’s a self-perpetuating cycle, as well: The more people hoard their dollars — a natural impulse — the weaker the rial becomes, and the more panicked the people become.
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