Iranians of all stripes flocked to the exchange offices on April 10 following the previous day’s government announcement that, in the face of a spiralling devaluation that was undermining the Iranian rial (IRR), it was forbidding open market dollar exchange rates on the national currency and was pegging the greenback rate at IRR42,000. However, many exchanges were refusing to sell at the official new unified price and street corner traders, fearful of the new directive, were conspicuous by their absence. Exchanges complained they were yet to receive official instructions on how to conduct their newly regulated business.

Fears over Iran’s future in the face of unrelenting hostility from Donald Trump—who on May 12 could withdraw the US from the nuclear deal signed two years ago—were a major factor in driving the open market dollar value of the IRR to an all-time low of IRR63,000 in just three days of trading, with the currency also sunk by a lack of trading—independent forex outlets had reached the point where they were refusing to sell hard currencies.

On Ferdowsi Street, the centre of Iran’s forex market, several traders on April 10 were now refusing to sell dollars at the new official price of IRR42,000. Pound sterling and euro rates, meanwhile, remained at much higher prices from the day before. However, word later came that the rates for these currencies had been officially set at IRR59,330 and IRR51,709, respectively.

On both sides of the street, traders declined to let go of their valuable greenbacks as they sought to cut their losses following Vice President Eshaq Jahangiri’s late-night announcement the day before that any trading for unofficial rates had been made illicit.

"Last night on TV I heard it's 42,000 so I came here to buy some for my son who is overseas. I've checked every exchange, but I couldn't find any dollars," said Tahmoores Faravahar, a 71-year-old retired oil sector worker, who spoke to AFP on April 10.

Other people remained at home looking at their chosen bureau de change website; however, many seemed to be continuing with pre-announcement rates or were entirely offline for periods of time due to massive site access demand.

Late on April 9, some traders had even resorted to listing their dollars on local second-hand sales website Divar.ir as the news broke about the collapse in their value.  

Officials in Iran have been a pains to point out that the country is not facing a currency crisis, but a crisis in accessing currency notes. Currency in the form of letters of credit is said to be relatively easily available to both the private or public sector. Only 5% of Iran's hard currency is estimated to be in the form of notes for sale in banks and exchange markets. Iran reported a $17bn currency surplus for last year, with non-oil exports coming in at $47bn and oil exports recording $55bn. 

Politicians and generals point fingers
The frustration on the street was echoed early on April 10 in the country’s parliament when the summoned Central Bank of Iran (CBI) governor Valiollah Seif addressed MPs, only to find himself in the centre of a crowd of furious lawmakers shouting and cursing him live on state television. Speaker of Parliament Ali Larijani was seen to beg the representatives from several regions to take their seats, but the disturbance continued until other parliamentarians had to intervene.  

After normal business in the Majlis (Iran’s parliament) resumed, Seif was quoted as saying by Mehr News Agency that there were “signs of neighbouring countries’ plots [in the currency slump]”.

He added: “In the United Arab Emirates and Saudi Arabia, plans are being made to disrupt Iran’s forex exchange market. We need to keep calm and disappoint the enemies [from realising their plans].”

Seif further stated that rumours spread by social messaging application Telegram Messenger were part of the issue as channels with hundreds of thousands of followers were disseminating information on a minute by minute basis. Around half of Iran’s population of 80mn subscribe to the app.

The central bank chief went on to add that the government had now moved to entirely remove the US dollar from international transactions and replace it with euros in trade.

That political statement by Iran’s top banker was echoed by Iran’s top general and Minister of Defence of the Armed Forces Amir Hatami. He remarked that the US Treasury Department “has employed 500 people only for disrupting the Iranian economy … to stand against Iran’s progress,” Tasnim News Agency reported.

Traders left without a rulebook
Despite the government’s intervention to unify the official and unofficial exchange rates at the eleventh hour, most traders across the country trying to come to terms with the first day of the new currency regime had not received any details from the CBI on how to comply with the new regulation, further complicating matters, according to Press TV.

The new government rules state that a maximum $1,000 can only be sold to travellers and students. The buyer must present a valid visa in their Iranian passport and the ticket for their outbound journey to receive the cash. Dual citizen Iranians and those with a valid green card for the US or residency elsewhere are not eligible for the new rate.

Other rules include a ban on the possession outside a bank account of more than $10,000. The CBI has also stated that anyone who holds more dollars than this maximum must within a month either sell the money at the official rate or invest it in a US-denominated bank account in Iran. Buying and selling the dollar at higher prices than the official rate is now classed at the same level as smuggling contraband and anyone suspected of such transactions can be arrested and made subject to legal action.