By Xander Snyder

Things in Iran seem to be going from bad to worse. Protests have broken out again, this time centered in the capital, Tehran, as the Iranian currency plummets in value. Thousands of people, including traders in Tehran’s Grand Bazaar, participated in the protests, which started June 24. According to the BBC, they are the largest protests in the country since 2012, when economic sanctions degraded the economy and galvanized the public to action. The Iranian economy, however, rebounded after the nuclear agreement in 2015 lifted the sanctions, and Iran re-entered the global economy. The U.S. withdrawal from the deal, and fears that it will lead to a total collapse of the agreement, is at least partly responsible for the rial’s decline.

The rial is currently worth 90,000 rials to the dollar, a sharp fall from roughly 43,000 to the dollar at the end of 2017. And its decline has had a real impact on businesses that rely on imports, which become more expensive when a currency depreciates.

The protests themselves occurred in two phases. The first happened at two shopping centers specializing in cell phone sales in Tehran, where traders went on strike and shut down the centers on June 24. The merchants criticized the shops that remained open and called the shopkeepers “cowards.” The minister of information and communications technology has claimed that the merchants went back to work, but only after the government provided guarantees that it would help them secure hard currency for imports. (How the government plans to actually do that remains unclear.)

The government’s guarantees didn’t manage to quell the unrest for long. The following day, more protests broke out, this time at the parliament building. The demonstrators were confronted by police, who used tear gas to disperse the crowd. According to media reports, protesters shouted anti-regime slogans, including “Leave Syria, think of us” and “Death to the dictator,” and other unusual slogans like “Death to Palestine.”

It’s not clear who organized the protests, but Iranian media reported that the demonstrations that shut down the Grand Bazaar started when the rial fell to 90,000 to the dollar. The government tried to address the currency problem in April, when it fixed the official exchange rate at 42,000 rials to the dollar. But this rate hasn’t held on the black market. Large, anti-government protests also erupted in late December and early January. Those protests, initially sparked by rising food prices, spread to cities and villages across the country, while the current demonstrations are focused in the capital.

The Rouhani government, which thought that the nuclear deal would generate more widespread economic benefits than it actually has, is under pressure from hardliners, who were happy to see it fail. Indeed, it’s not just opposition or international media reporting on the protests this time around, as so often happens in Iran. Mainstream Iranian media outlets have also been reporting on them, indicating that a segment of the establishment wants them to be publicized. Security forces appear to have control of the unrest for now, but there’s no telling if the peace will keep, considering that sanctions are looming and there’s no end in sight for the rial’s decline.

Xander Snyder
Xander Snyder is an analyst at Geopolitical Futures. He has a diverse theoretical and practical background in economics, finance and entrepreneurship. As an investment banker, Mr. Snyder worked in corporate debt origination and later in a consumer-retail industry group at Guggenheim Securities, participating in transactions ranging from mergers and acquisitions, equity and debt capital raises, spin-offs and split-offs to principal investing and fairness opinions. He has worked on more than $4 billion worth of transactions. He subsequently co-founded and served as CFO for Persistent Efficiency, an energy efficiency company that used cutting-edge technology to create a new type of electricity sensor for circuit breakers and related data services. In his role, he was responsible for raising more than $1.5 million in seed capital and presented to some 70 venture capital and angel investors in the process. He also signed four Fortune 500 companies as customers, managed all aspects of company accounting, budgeting and cash flow, investor relations, and supply chain and inventory management. In addition to setting corporate strategy, he helped grow the company from two people to a 12-person team. As an independent financial consultant, Mr. Snyder wrote an economics publication for a financial firm that went out to more than 10,000 individuals and assisted in deal sourcing for a real estate private equity fund. He is an active real estate investor and an occasional angel investor. Mr. Snyder received his bachelor’s degree, summa cum laude, in economics and classical music composition from Cornell University.