Iran Arrests Gold Coin Dealers to Support Rial

Police arrested up to 100 people over the weekend including gold coin dealers in the Iranian capital of Tehran, closing the city’s open currency market.

The raids on shops and dealers on Saturday in central Tehran’s Jomhuri and Ferdowsi streets witnessed 30 currency traders detained, according to state officials, closing the whole market excepting a small number who operate under a license from the central bank.

The Financial Times quoted one employee at a currency shop, now closed down, as saying they are bringing down the dollar rate by force. He said the total number of arrests exceed 100 persons. He then added that Iranian authorities are also confiscating all banking checks and assets in the shop.

Iranian authorities also said they have seized large quantities of gold coins. Last week the Central Bank of Iran opened its own foreign-currency outlets, offering an undercut of the informal market by 2 percent.

This weekend’s shut-down came after the Iranian rial lost 30 percent of its U.S. dollar value in the previous week alone, bring the total value lost in the currency down to almost two thirds thus far in 2012. The drop has been caused, analysts say, by a shortage of foreign currency inside Iran after international sanctions aimed at deterring the ruling Revolutionary Council from pursuing the development of nuclear weapons.

Police have been patrolling Tehran’s open currency market where unofficial exchange rates hit 30,000 rials per dollar, about 6 percent above the government’s published rate. Currency traders continue to walk the streets, according to reports, swapping rials with passersby for foreign money.

Consumer-price inflation is already running well above 25 percent per year, bring marches and strikes across Iran by traders and shopkeepers last week. Police fired teargas on Thursday to disperse a crowd of about 200 people near the Ferdowsi currency market, according to reports from Bloomberg.

The major supplier of gold coins to private citizens in Iran, the Central Bank of Iran, was forced to suspend direct sales of gold in December of 2001 following a surge in gold demand and a shortage of reserves.

Gold coin imports and other bullion imports from neighboring Turkey surged to $6.2 billion between January and July from $22 million during the same time period last year.

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