27 Arrested in Connection with Recent Currency Market Fluctuations

On a day when several members of parliament issued a written notice to the Minister of Intelligence of Iran, demanding the identification and prosecution of individuals benefiting from the rise in currency and gold prices, the public prosecutor of Tehran announced that 27 people have been arrested in recent days in connection with the rising value of currency. On Sunday, February 18, four members of parliament requested in a written notice to the Minister of Intelligence the identification and prosecution of what they termed 'information rent-seeking agents' who have become 'wealthy' due to recent economic and monetary fluctuations, particularly in the increase of gold and currency prices. The official news agency of the Islamic Consultative Assembly, House of the Nation, mentioned Heshmatollah Falahatpisheh, Shahrouz Barzegar, Hossein Naqavi Hosseini, and Davood Mohammadi as the four representatives who submitted this written notice. The issue of rising currency prices was also reflected in notices from two other members of parliament to the President and the Minister of Economy, including Mohammad Ebrahim Rezaei, who questioned Hassan Rouhani about why he is not fulfilling his duty to control the growth of currency rates. In recent days, currency prices have been on the rise, breaking records multiple times. Last week, the price of the US dollar reached the threshold of 5,000 tomans, and on Wednesday, Tehran police reported the arrest of over 90 'currency brokers' and the closure of 10 currency exchange offices. In this context, Abbas Jafari Dolatabadi, the Tehran prosecutor, confirmed the arrest of 27 individuals in connection with the rising value of currency on Sunday, although it is unclear whether the figures provided by the Tehran prosecutor are part of the statistics released by the police regarding the arrest of 'currency brokers' or if Mr. Dolatabadi is referring to a completely new group of suspects. He stated that they believe currency issues are multifaceted and complex, and that merely arresting suspects cannot control currency prices, but added that the prosecutor's office has intervened at the request of the Central Bank on this matter. Last week, following police actions in arresting 'currency brokers' and closing several exchange offices, it was announced that police intervention temporarily led to a slight decrease in the exchange rate of the dollar against the rial, with the dollar price reaching 4,718 tomans. On Sunday, the state news agency IRNA reported that the decrease in the price of the dollar and other currencies in the Tehran free market continued, with the dollar price dropping below 4,700 tomans. Despite the Central Bank of Iran announcing a three-pronged approach to stabilize the currency market, on Sunday, the head of the parliamentary faction for combating economic corruption stated that this program is a temporary solution and that the Minister of Economy must be held accountable for the current situation. Amir Khajesteh said that if appropriate actions had been taken in the early days of the currency rate increase, we would not be witnessing turmoil in the currency market today. He also accused the government's economic team of 'trying to impose inflation on the people through currency price increases.' The Central Bank of Iran's three-pronged plan to stabilize the currency includes 'issuing deposit certificates with a 20% interest rate, issuing currency-based deposit certificates with interest rates of 4 and 4.5%, and a pre-sale plan for Bahar Azadi coins through selected branches of the National Bank.' In an analysis of this program, Fereydoun Khavand, an economic analyst and university professor, noted in a memo for Radio Farda that all three axes of the Central Bank's new policy pursue a common goal: 'to offer diverse options to depositors in order to withdraw liquidity from the currency market and quell its volatility.' Mr. Khavand pointed out that the Central Bank's 'incorrect decision' to lower interest rates, which was made solely based on the reduction of inflation rates, is one of the factors that has created the current situation in the currency market. He also emphasized that the Central Bank's influence over the Iranian currency market is not very extensive, and geopolitical variables also significantly affect the Iranian currency market. This economic analyst noted that currency market players are closely watching the fate of the 'JCPOA' and will perceive the potential exit of the United States from this agreement as a warning signal for further destabilization of the rial. Regional tensions, including the risk of Iran becoming further embroiled in Middle Eastern conflicts, also impact the country's currency market. The variables that Mr. Khavand emphasizes are beyond the Central Bank's control.