TEHRAN — Iranian police and demonstrators clashed Wednesday during street protests linked to rising prices and the plunging value of the national currency.

Police in black riot gear fired tear gas and moved to disperse the protesters after they had rallied outside the capital’s central bazaar and then marched toward the parliament building. Many businesses and shops were shuttered, which in effect led to the shutdown of the huge marketplace.

“Our checks bounced, our businesses are ruined,” said a merchant who gave his name as Ali. “How shall we earn a living?”

About 500 owners of apparel shops and other businesses joined in the march, expressing outrage over their inability to stay afloat with the national currency, the rial, appearing to lose more value every day.


“I don’t dare to sell” anything, said Hassan, 48, a cloth salesman who, like others, declined to give his full name, fearing retaliation. “I am scared I won’t be able to replenish my shelves.”

The protests were unusual in this tightly controlled society and seemed to be a spontaneous reaction to outrage over rising prices and the government’s inability to halt the currency slide.

Worried Iranians have been buying up dollars and other foreign currencies, further devaluing the rial.

The merchants’ decision to take to the streets appeared significant because the business class is often viewed as a proponent of the status quo. Merchants from the main bazaar were regarded as major supporters of the 1979 Islamic Revolution.


The complaints voiced Wednesday were not about Iran’s lack of democracy but rather about what many viewed as the inept economic policies of the government of President Mahmoud Ahmadinejad, whose second term ends next year. By law he cannot run again.

The protesters marched more than a mile from the bazaar to a popular junction known as the Istanbul intersection, near the Turkish and British embassies and close to parliament.

As they marched, they decried what they termed “inefficient government,” and some assailed Iranian rulers’ determination to help the nation’s close ally, Syrian President Bashar Assad.

“Leave out Syria!” some marchers chanted. “Think about us!”


Iran is believed to be providing huge subsidies to Syria to help keep Assad’s government afloat amid a rebellion that’s in its 19th month.

U.S. and allied officials saw the clashes in Tehran as evidence that the tough Western sanctions imposed this year represent an increasing political threat to the Iranian government and called for a further tightening of the restrictions. The sanctions, aimed at the Islamic Republic’s controversial nuclear program, have restricted sales of its major export, oil, reducing its earnings.

The sanctions “are having a profound impact on the ground,” said Victoria Nuland, a U.S. State Department spokeswoman.

At the center of the protests is discontent with Iran’s free-falling currency. The rial has lost as much as 80% of its value against the U.S. dollar in the last year, and its plunge has accelerated at a record pace in recent days.


Mark Dubowitz, a sanctions expert at the Foundation for Defense of Democracies, said the rial’s fall may be a sign that Iran doesn’t have the foreign exchange reserves needed to prop up the currency, or at least can’t access reserves that might be in accounts abroad that have been frozen by sanctions.

“You’d think that if the regime had sufficient reserves, and access to them, they could be intervening to prevent the rial from plummeting further,” he said.

The poor and middle classes have been hit especially hard as prices for food and other necessities have soared.

At the Istanbul intersection, protesters arrived as police were raiding the shops and corner hangouts of many money-changers. The operation was part of a crackdown on illegal sales of U.S. dollars, which are growing in popularity as a hedge against the dwindling value of the rial. Authorities blame these transactions in part for the rial’s declining value.


Police fired tear gas to disperse the protesters, who set several garbage bins ablaze amid scattered clashes.

A day before the protests, Ahmadinejad had blamed the current crisis on the U.S.-led sanctions and called for action against 22 “ringleaders” of the currency-exchange market. The president also said Iran was the victim of a “psychological war,” an apparent reference to a widespread sense of economic panic.

Iranian leaders have vowed not to back down on their nuclear program despite the tough Western sanctions. Iran says its atomic program is meant for peaceful uses, including energy generation. Washington and its allies suspect that Tehran is intent on building a nuclear bomb.

Later in the day, some currency exchange dealers returned to their shops after closing amid the earlier chaos. Burned trash still filled the streets.


“People are cautious,” said a black market currency dealer who gave his name as Ehsan. “They cannot take a risk to buy or sell, as there is no certainty that the announced prices will be stable until tomorrow.”

A retiree who gave his name as Emad said he intended to buy $1,000 in U.S. currency despite a high rate of about 35,000 rials to the dollar.

“I am sure the price of dollars will go up in the weeks to come,” he said.

patrick.mcdonnell@latimes.com


Special correspondent Mostaghim reported from Tehran and Times staff writer McDonnell from Beirut. Staff writer Paul Richter in Washington contributed to this report.