Protest Gathering of Tehran Bazaar Merchants

Simultaneously with the announcement of the Iranian government's new policy for a three-tiered currency system, a number of Tehran bazaar merchants closed their shops on the morning of Tuesday, July 4, and gathered in protest against the turmoil in the currency market. The Fars News Agency cited the reason for the Tehran merchants' gathering as 'protest against the recession prevailing in the market, the unregulated fluctuation of currency rates, lack of customers, and rising prices of goods.' According to this report, the closure of the Tehran bazaar initially began with fabric sellers in the 'Grand Bazaar,' 'Charsuq,' and 'Qeysariyeh Bazaar,' and subsequently, other merchants also closed their shops and ceased work. According to Fars News Agency, in the 'Amin-Hozour' market, which mainly sells household appliances, shopkeepers have also ceased buying and selling due to the uncertainty surrounding the dollar's status. Based on videos shared on social media, the protesters chanted slogans such as 'Death to inflation' and 'Leave Syria alone / Think about us.' The closure of the Tehran bazaar comes just a day after protests were witnessed in the 'Aladdin' and 'Charsou' shopping centers, which are primarily dedicated to the buying and selling of mobile phones and digital devices, where protesters marched on 'Jomhouri' street against the turmoil in the currency market. On Sunday, the prices of various currencies in Tehran's free market surged again, with the price of each US dollar reaching a new record of nearly 9,000 tomans. On the other hand, Iranian media reported on Tuesday morning about the government's new plan for a three-tiered dollar pricing system. According to reports, the new currency rates in the market are currently unclear, and no buying or selling is taking place. Valiollah Seif, the head of the Central Bank of Iran, announced the creation of a 'secondary currency market' and stated that under this plan, the currency price would be set at three tiers, and for 'non-essential goods,' currency would be traded in an agreement between exporters and importers. According to Mr. Seif, the import of 'essential goods,' including medicine, will continue as before with the dollar priced at 4,200 tomans. ISNA has estimated that the third currency rate could be between 6,000 to 6,500 tomans. Meanwhile, the Mehr News Agency reported that in a meeting on Sunday, Hassan Rouhani approved the agreement for trading between exporters and importers in exchange offices. Additionally, according to ISNA, under this plan, exporters who previously did not offer their currency in the 'Integrated Currency System' (NIMA) will offer it at an agreed rate for non-essential goods that do not qualify for the 4,200 toman currency. While the head of the Central Bank has spoken of a 4,200 toman rate for importing essential goods, Mohammad Reza Modudi, the deputy of the Trade Development Organization of Iran, stated that in the new government plan for importing 'essential and strategic' goods, a 3,800 toman rate will be allocated. He also announced that for importing raw materials and machinery, a 4,200 toman rate will be allocated. According to Mr. Modudi, for other goods that are in the third priority, currency will be allocated at the agreed rate, and the list of these goods will be announced soon. Under the current government policy, the currency needed for imports and the currency resulting from exports is provided to the monetary and banking network of Iran's economy at the 4,200 toman rate, and all rates other than that are considered 'unofficial and illegal.' However, the implementation of this policy has faced failure in practice, and according to Mohammad Baqer Nobakht, the government spokesman, even some importers who received 4,200 toman currency for importing goods calculated the price based on the free market dollar when offering their goods and sold them at a higher price. Rouhani's government officials claim that the increase in currency prices has no economic reasons and is due to people's demand for buying currency. Meanwhile, Mohammad Baqer Nobakht, the head of the Planning and Budget Organization, reiterated that foreign currency resources exceed the country's needs. He emphasized that the reason for the increase in the dollar price is 'the increased eagerness and tendency to convert rial holdings into currency.' Currency market activists and economic analysts link the recent increase in the dollar price to international political developments, especially the US exit from the JCPOA, the return of economic sanctions, particularly on banking and oil relations with Iran, and the uncertain future of the JCPOA without the US. Based on these analyses, the parliament's vote to postpone the two-month review of the bill to join the Convention on Combating the Financing of Terrorism and the statements of the Supreme Leader opposing this bill, which have reduced the likelihood of an agreement between Iran and Europe to preserve the JCPOA, have also influenced the sudden increase in the dollar price in recent days.