“The rial isn’t real money anymore,” a shopkeeper said matter-of-factly, as he tried to talk me into paying dollars for the shoes on the counter.
In the month I spent in Iran the market rate for the rial depreciated about 65% against the US dollar, from being worth 22,000 rial to the dollar to 36,400 at one point. Just two weeks before I arrived, it was 18,000.
The official rate, offered by banks, is still just over 12,000 rials to the dollar but you’d have to be stupid to change your greenbacks there and in Tabriz, at least, even the banks don’t want rials.
The massive drop is because of the sanctions imposed by the US and although I cannot comment on the political why’s and wherefore’s due to the news bubble I’m in, I can tell you what is happening on the streets.
People are worried. More and more men with tense faces and bum bags filled with wads of dollars and euros crowd the outsides of official exchange shops, hoping to convince some shmuck to wear their commission as well as a lower rate than than advertised on the shop boards opposite.
The price of gold coins is rising too. I watched as man after man handed over millions of rials for one thin five cent piece-sized circle. You know the problem was big yesterday when people start putting their money into gold today.
Prices of ordinary products like juice, pistachios (200,000 rials for a kilo! It was an eighth of that two weeks ago) and clothes are rising daily as the cost of producing and delivering them grows, yet Iranians aren’t being paid more.
Even the tourists are starting to feel sorry for the Iranians as well as patting themselves on the back for their own good timing.
My friend dan bought a bag and some jandals in the bazaar in Tehran and said he didn’t bother bargaining for either – both cost him a couple of dollars each at the inflated market rate for rials and he figured the guy selling them probably needed the cash more than he did right now (given how lucrative that particular bazaar is, I somehow doubt it though).
An Iranian friend told me that this time last year his monthly salary of 300 million rials was worth about US$3000. Now it’s less than US$1000 and falling.
He’s fairly sanguine though. He says this sort of thing happens in Iran and all they can do is wait it out.
What it means for him today is that people, such as his parents, who are paying for their children to attend foreign universities are being stung. The vast majority who may have been able to make an overseas holiday last year are now stuck at home – even more trapped, one may say, than usual by foreign policy.
Elections are a mere nine months away and even though Ahmadinejad has been unofficially forbidden by the ayatollah from having anything to do with anointing a successor, you know that the irritation now is going to grow into a big deal at the polls, if something doesn’t give between now and then.