Iranian police arrested around 100 money changers on Wednesday (Feb 14) as it scrambled to contain the decline of the rial, which has lost a quarter of its value in six months.
A video by state broadcaster IRINN showed dozens of currency hawkers, who normally ply their trade across the road from the British embassy in central Teheran, being rounded up by police.
Iran’s currency has collapsed from 38,400 rials to the dollar in July to a record low of 48,400 on Wednesday.
Teheran’s chief of police, General Hossein Rahimi, told local media that 10 exchange offices had also been shut.
Iran’s nuclear deal with world powers, which lifted many international sanctions, had raised hopes that the currency would regain its lost value.
On the day it was announced, many celebrating Teheranis waved dollar bills alongside 10,000 rial notes – a sign of their hope that it would return to the level it had last enjoyed prior to the tightening of US-led sanctions in 2012.
Instead, the currency has continued to plummet, particularly after the arrival in office of US President Donald Trump, whose threats to tear up the nuclear deal have scared off many foreign investors and prevented international banks from re-engaging with Iran.
But blame is also being placed closer to home.
“It’s the government which is partly responsible for the rise in the dollar,” a currency trader told AFP, asking not to be named.
He said the government itself was selling dollars at 48,800 rials on Tuesday – part of its struggle to repatriate dollars it earns from selling oil and gas abroad.
The other big driver was the decision by the central bank to lower interest rates in September.
Iran’s banks have offered sky-high rates in recent years – often over 20 per cent – as they compete for deposits against many individuals and businesses who prefer to keep their money in dollars or real estate.
With many banks looking shaky, Iran’s central bank decreed they could no long offer rates above 15 per cent – a move which traders say pushed many back towards the dollar.