Iran’s currency has collapsed in two ways — gradually and then suddenly. Iran is very much in the sudden phase right now. It took 24,600 rials to buy one dollar on September 24. It took 39,000 rials to buy one dollar on October 2. That’s good for a 59 percent drop in just a week. This kind of currency cliff-diving is basically a bank run on the rial — a bank run U.S.-led sanctions set off.
On Tuesday, President Mahmoud Ahmadinejad responded to currency crisis by vowing to crack down on illegal money changing and speculators, further angering the rather sizable number of traders (legitimate and black market) who rely on the exchanges to do business. On Wednesday morning, about 100 traders and money lenders gathered in front of Iran’s central bank to demand greater action on the struggling economy, and many of the shopkeepers at one of Tehran’s largest bazaars closed their stores in solidarity. Riot police quickly dispersed the group, while other officers swarmed on a popular black market district, rounding up money changers in a series of “cat-and-mouse” chases. Protesters responded with larger marches and burning tires.
This is a regime on the edge. The only thing the hardliners can hope for at this point is an Israeli attack or a Romney victory and impending US war to rally the people behind them.