Iran's Currency Hits Lowest Point This Year As Protests Continue

Iran’s rial hit a low point against major currencies Monday, as nuclear talks with the United States remain in limbo, prices rise and popular protests continue.

The rial has been sliding since mid-March when year-long multi-lateral talks in Vienna to revive the 2015 nuclear agreement known as JCPOA came to an abrupt halt. Washington and Tehran apparently were too far apart on some issues, including Iran’s demand that its Revolutionary Guard should be removed from the US list of terrorist organizations.

The rial slid to 310,000 to the US dollar on Monday, while in 2017, before the Trump administration decided to withdraw from the JCPOA it traded at 34,000 to the US dollar, ninefold decline. This was the currency’s lowest point so far in 2022.

The continuing decline of the currency is bad news for the rulers of the Islamic Republic as they already face runaway inflation at above 40 percent. Every percentage point the rial loses in value it translates into higher food prices, because at least half of Iran’s wheat and a large amount of animal feed is imported.

The government’s decision in early May to stop multi-billion-dollar subsidies for food impots resulted in a price shock for ordinary people, with experts predicting even higher inflation.

A report in the Iranian media on Monday said that even bottled drinking water is too expensive for people living on ordinary salaries.

The Statistical Center of Iran (SCI) just last week released its report on prices for the 30-day period of April 21-May 20.

Prices for pasta, which has become a relatively cheap source of calories for wage earners, jumped by 49 percent in one month, and cooking oil by 22.3 percent.

When it comes to chicken, eggs and other food items, what people and media report is astonishing. Chicken prices have doubled in recent weeks and sales declined by 30 percent. The government was forced to lift export restrictions to help producers stay financially solvent, but most have cut back on production, reportedly killing and dumping newly hatched chicks.

SCI reports that price of lemons has risen 11 percent and watermelon by 12.8 percent in one month.

As the government lifted food import subsidies, protests began in dozens of small towns, as large cities, notably the capital Tehran remained mostly quiet. But on May 22, an unexpected disaster sparked new protests.

A 10-story building in the south-Western city of Abadan in the oil-rich |Khuzestan province collapsed, killing more than 30 people and leaving an equal number under the debris. Quickly it became apparent that the newly built building was mired in corruption, as repeated warnings by inspectors were ignored by its well-connected owner. He even received permission to add a few floors to the building.

Iranians on social media often talk of a crisis of legitimacy for the Islamic Republic. Many people have lost all confidence that the authorities can govern even at a minimally acceptable standard.

This, than any particular incident or inflation is the deep rooted cause of protests. A building collapse, such as the incident in Abadan, simply comes to remind citizens that the authoritarian system is corrupt at all levels, and there is no hope for any tangible improvement.

A former deputy minister and political activist Mostafa Tajzadeh tweeted Monday that the government claims to be able to circumvent US sanctions and export oil, yet there is no positive impact on the economy and people continue to suffer.