Economic crisis forces Iran central bank head to step down

TEHRAN: The historic fall of the country’s currency, the rial, has sparked public anger over inflation and economic hardship, sparking nationwide protests that have forced the head of the country’s central bank, Mohammad Reza Farzin, to resign.

According to Iranian state television, Farzin resigned after protesters took to the streets in Tehran and other major cities.

Traders and shopkeepers protested in the central Tehran area of ​​Saadi Street and the Shush area near the central Grand Bazaar.

Historically, these areas are considered important centers of political change, as this very bazaar was also a symbol of change during the 1979 Islamic Revolution.

The American news agency ‘Associated Press’ reported that demonstrations were also seen in Isfahan, Shiraz and Mashhad, with police using tear gas in some areas to disperse the protesters.

The demonstrations are the largest since the 2022 protests, when 22-year-old Mahsa Jina Amini was arrested by police for violating hijab laws and died in custody, sparking months of protests across the country. Observers said many shopkeepers closed their shops in protest and urged others to do the same.

Business activity was severely down during the period, although some shops remained open, according to the semi-official news agency ILNA.

The protests were limited a day earlier, with protesters chanting anti-government slogans only in two mobile markets in Tehran. The main reason for Iran’s economic woes is the depreciation of the rial, which hit 1.42 million per dollar on Sunday and recovered slightly to around 1.38 million per dollar on Monday. The currency was around 430,000 per dollar in 2022 when Farzin took office.

The sharp decline in the rial has fueled inflation, pushing up food and basic necessities prices and putting pressure on household budgets.

According to Iran’s official statistics center, inflation was 42.2 percent in December, up from the same period last year and higher than November’s inflation. Food prices rose 72 percent year-on-year, while health and medical supplies rose 50 percent, a sign that critics say could be a sign of possible hyperinflation.

International sanctions are also weighing on Iran’s economic woes. The rial was trading at around 32,000 to the dollar after the 2015 nuclear deal, but sanctions tightened again in 2018 after US President Donald Trump withdrew from the nuclear deal.

The 12-day war between Iran and Israel in June and the reimposition of UN nuclear sanctions in September have also added to economic instability, adding to uncertainty in international markets.