Iran’s Khamenei Warns Against Complacency Amid Rial Anger

(Bloomberg) -- Iran’s Supreme Leader Ayatollah Ali Khamenei has warned government officials not be lazy or take their posts for granted as President Hassan Rouhani’s government tries to contain mounting public anger over his management of a currency crisis.

“Officials should be careful to avoid neglect, laziness, pomposity, arrogance towards the people or relying on positions of leadership that can last for days,” Khamenei said in a speech at a military academy, according to the semi-official Tasnim news agency.

His comments come after a week of sporadic protests at Tehran’s Grand Bazaar, where gold and jewelery traders shuttered shops and demonstrated against rising prices and the weakening rial.

On Wednesday, Rouhani addressed growing public anger over the government’s management of a currency crisis brought on by U.S. President Donald Trump’s withdrawal in May from the 2015 nuclear deal and the decision to reimpose sanctions on Iran’s economy.

Rouhani said his government would not step aside or resign but that changes would be made to his current cabinet which has come under fire from ordinary Iranians as well as some top officials themselves, for its ability to fight U.S. measures designed to severely weaken Iran’s economy.

“Today, the enemy’s plan is to create a rift between the people and the state. But they are being stupid. They don’t know the state and the people are one," Khamenei said in his speech Saturday. “Economic pressures are being used to divide the people from the state. But our bond with the people becomes stronger.”

Earlier on Saturday Akbar Torkan, a top adviser to Rouhani, said the Central Bank of Iran has inadequately carried out policy intended to control a slump in the rial, after it hit record lows in April, as people hoarded dollars in anticipation of Trump abandoning the nuclear accord.

Since April when the rial breached a record high of 60,000 against the dollar, the Central Bank of Iran has tried to take control of its collapsing value by unifying the exchange rate to a single, fixed official rate of 42,000 and banning all other non-government sales of gold coins and foreign currency. The policy has failed to thwart illegal currency trades, and earlier this week the dollar was selling for an average 84,300 rials on the black market.

“It’s impossible to keep currency prices low when there’s political pressure. When prices generally increase, if you keep the currency cheap, imports become cheaper and this leads to a rout in domestic production,” Torkan told reporters, according to the semi-official Tasnim news agency. Had the central bank unified the rial four years ago, as it initially planned, the present crisis could have been averted, he said.

Rouhani is due to visit Switzerland and Austria from Monday as the European Union seeks to develop a package of mechanisms that will still guarantee the economic benefits of the nuclear deal for Iran, without falling foul of U.S. secondary sanctions when they are reimposed on Nov. 4.

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