Iran Arrests Illegal Money Changers after Currency Slide

Iranian police on Wednesday cracked down on illegal money changers in Tehran, witnesses said, in an apparent bid to halt a dramatic plunge in the value of Iran's currency this week.

Unlicensed vendors who usually walk the streets in the capital's central Ferdowsi area buying and selling small amounts of dollars were rounded up and arrested, witnesses said.

The crackdown prompted official exchange bureaux in the district to shutter their premises, one licensed money changer told Agence France Presse by telephone.

The police action was ordered following a startling, 60 percent dive in the value of Iran's currency, the rial, against the dollar in just a few days.

President Mahmoud Ahmadinejad on Tuesday said Western sanctions were mostly to blame, but rival factions said Ahmadinejad's mismanagement of the economy was the main cause.

One money changer said the rial early Wednesday was seen to have stabilized at around 34,000 to the dollar, but stressed that almost no transactions were taking place in the market.

On Tuesday, the rial closed at around 36,100 to the dollar.

A week ago, it was trading at around 22,000 to the greenback. A year ago, the rial was worth around 13,000.

The U.S. government has said it sees the rial's plunge as proof Western sanctions are having an big impact on the Islamic republic's economy.

But Ahmadinejad on Tuesday said that, even with the "psychological war on the exchange market," Iran would not be pressured into curbing its nuclear activities -- the stated aim of the sanctions.