10/08/2012, 00.00
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Government and people struggling with the rial's crisis

Tehran has imposed a fixed dollar rate, but transactions are on hold. Prices are rising on a daily basis, sometimes even 100 per cent. Iran's parliament has criticised Ahmadinejad's populist policies. Businessmen and middle class families are eager to buy foreign exchange.

Tehran (AsiaNews/Agencies) - Iran has imposed a fixed dollar rate on the national currency, the rial, in a bid to reverse a steep drop against the US dollar. Increasingly, President Ahmadinejad is coming under harsh criticism as ordinary Iranians try to buy black market dollars, upset at the Pasdaran who have privileged access to dollars.

A few days ago, the rial was trading at its lowest point in years: 37,500 rials against the US dollar. Exhausted by years of an international embargo and a 25 per cent inflation rate, ordinary Iranians have to face daily rises in prices for basic items, such as bread, rice, chicken, cheese, sugar, yogurt, sometimes by 100 per cent.

In recent days, people took to the streets in Tehran and other cities to protest against the rising prices and the government's currency policies. Blocked by police, these demonstrations were the first since the authorities cracked down on the anti-regime green wave movement.

In a desperate attempt to stop inflation, the government has set the exchange at 25,970 rials to the dollar, but exchange bureau officials are saying that no one is selling at that rate because they can get at least 28-30,000 on the black market.

The authorities are blaming the United States for the inflation and the currency's collapse; however, in parliament, many lawmakers accuse President Mahmoud Ahmadinejad and his economic policies, especially government subsidies helping families cope with high food prices.

Poor families in fact have been receiving government financial aid worth billions of dollars. Yesterday however, 179 members of the Majlis (parliament) out of the 240 present voted to consider whether to halt the second phase of subsidy reform, which represents a blow to the president's populist choices.

Demand for US dollars remains high. Because of an embargo imposed earlier this year on financial transactions with Iran, businesses cannot trade with the outside world.

Given the situation, many families would like to put their wealth in safer havens. Others need foreign exchange to travel or send money to their children living abroad.

Even more frustrating for many Iranians is the fact that the Pasdaran, the Revolutionary Guards that back the regime, have a privileged access to foreign exchange bypassing regular customs channels.

Yet the country's current problems will not lead to a revolution, nor to any second thoughts by its leaders on Iran's nuclear programme, economist Djavad Salehi-Isfahani said.

The poor however are increasingly restive for the lack of government support, whilst middle and upper classes are growing impatient with the lack of foreign exchange.

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