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Message Subject A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East
Poster Handle Anonymous Coward
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Iranians Abandon Meat for Bread as Rial Freefalls

Iran’s freefalling currency is turning meat into a luxury, sparking overnight price surges and spurring shoppers to stockpile goods.

“Most of my customers just look at products behind the window and pass,” said Behrouz Madani, 42, who owns a butcher shop in northwest Tehran. “I see them going to the next store, which is a bakery, to feed their families with bread.”

Iran’s rial is in a tailspin, having lost more than half of its value against the dollar in street trading in the past two months as U.S. and European sanctions aimed at curbing the country’s nuclear program bite. Riot police yesterday fired tear gas and sealed off parts of downtown Tehran after the currency’s plunge triggered street protests.

Security forces were also sent to the city’s bazaar after shopkeepers refused to open. The inflation rate, estimated by Parliament Speaker Ali Larijani at 29 percent last week, has accelerated to the point where the price of milk in Tehran rose 9 percent yesterday.

The economic situation has “reached a point where it becomes almost impossible not to show reaction,” said Anoush Ehteshami, professor of international affairs at Durham University in the U.K.

The rial is falling as sanctions eat into Iranian oil exports and foreign currency earnings. The currency dropped about 18 percent on Oct. 1, reaching 35,000 to the dollar on the unofficial market. The currency traded at 36,100 yesterday, the state-run Mehr news agency said, though traders in Tehran said most exchange houses have halted dealing in the greenback. That compares with the official value of 12,260 rials per dollar set by the central bank.
Future Angst

Most Iranians can’t access that rate apart from some importers of essential goods such as medicines, meat and grains.

People “are nervous about tomorrow and next week because they don’t know how much more expensive things will be,” said Mostafa Daryani, 52, whose family owns a Tehran supermarket chain. “They only buy their daily needs and ignore most of the things that are not urgent for daily life. Instead of one bottle of milk, they buy two.”

Prices of home appliances have doubled in the past six months and some shopowners prefer to hoard goods rather than sell them in the hope that they can get higher prices in the future, said Yahya Ebrahimi, 48, who owns an electronics store in central Tehran. Merchants are increasingly using the dollar value of items as the basis for sales, he said. ...

[link to mobile.businessweek.com]
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