Iran bans 1,300 imports as clashes break out in Tehran after currency weakness

New Delhi : Breaking news from Iran reports that, the country is banning imports of over 1,300 products, preparing its economy to oppose threatened US sanctions, among rare public protests against the push of its currency to record lows.

Police guarded the Grand Bazaar in Tehran on Monday as security forces fight back to restore normality after clashes with protesters angered by the rial’s collapse, which is disrupting business by driving up the cost of imports, witnesses said.

Traders from the bazaar, whose merchants supported Iran’s 1979 Islamic revolution, told Reuters by telephone that most shops remained closed.

“Police have dispersed the protectors. We are all angry with the economic situation. We cannot continue our businesses like this. But we are not against the regime,” said a merchant in the bazaar, who asked not to be identified.

Industries and trade minister Mohammad Shariatmadari announced the ban of import on 1,339 goods that could instead be produced within the country, Iran’s Financial Tribune newspaper reported on Monday, quoting an official document.

Banned imports include home appliances, textile products, footwear and leather products, as well as furniture, healthcare products and some machinery, the Tehran Times said.

The news indicates the US sanctions threat is pushing Tehran back towards running a “resistance economy” designed to save foreign exchange reserves and become as independent as possible in many products.

The Iranian rial is under heavy pressure from the US sanctions threat. It sank as low as 90,000 against the dollar in the unofficial market on Monday from 87,000 on Sunday and around 75,500 last Thursday, according to foreign exchange website Bonbast.com. At the end of last year, it stood at 42,890.

After US President Donald Trump decided to withdraw from world powers’ deal with Iran on its nuclear programme, some U.S. sanctions are to be re-imposed in August and some in November.

The decision may cut down Iran’s hard currency earnings from oil exports, and the prospect is triggering a panicked flight of Iranians’ savings from the rial into dollars.

Hundreds of merchants gathered in front of parliament in Tehran on Monday to protest at the rial’s fall, witnesses said.

In the Grand Bazaar, hundreds staged a similar protest, videos posted on social media showed. A larger, sustained series of protests could put pressure on President Hassan Rouhani, who has already been harshly criticised by hardliners for his economic record.

Ali Fazeli, the head of Iran’s Chamber of Guilds, a business association, told the semi-official Tasnim news agency later on Monday: “Business is as usual in the Grand Bazaar.”

Emadi and other Iranian economists noted that Iran had imposed import bans during the previous sanctions era before 2016 with only limited success.

Many foreign goods continued to enter the country at higher prices as a result of corruption and smuggling, benefiting business interests with the close official ties needed to arrange the shipments.

The government is justifying its latest clampdown on imports by citing economic security. The Tehran Times quoted Mohammad Reza Pourebrahimi, head of parliament’s economic committee, as saying the ban would prevent an outflow of $10 billion of foreign currency.

The International Monetary Fund estimated in March that the government held $112 billion of foreign assets and reserves, and that Iran was running a current account surplus. These figures suggested Iran might withstand the sanctions without an external payments crisis.

But as US pressure constricts Iran’s access to the international banking system, its ability to arrange some of those resources may have suffered. Indian government sources told Reuters last week that New Delhi was looking to renew a rupee trade mechanism to settle part of its oil payments to Iran, fearing foreign channels to pay Tehran might shut down.

Alarm about the rial’s weakness is prompting ordinary Iranians to pour money into non-cash resources. Tehran real estate prices have climbed and Iran’s stock market has jumped 17 percent since the end of May to a record high. Prices of gold coins have also risen sharply, reports a local media.