* Market under police supervision
* Unclear whether govt can stabilise currency
* Rial lost about a third of value in 10 days
* Slide cutting living standards, disrupting business
* U.S., EU may tighten sanctions further
By Yeganeh Torbati and Zahra Hosseinian
DUBAI/ZURICH, Oct 6 Tehran's Grand Bazaar
reopened under close police supervision on Saturday, traders
said, days after clashes between riot police and crowds
protesting against the collapse of the Iranian currency shut
down the market.
The resumption of trade suggested authorities had succeeded
at least temporarily in containing public discontent over the
plunge of the rial, which lost about a third of its value in 10
But it remained unclear whether the government of President
Mahmoud Ahmadinejad would be able to stabilise the currency,
which has been undermined by policy missteps by Iranian
authorities and Western economic sanctions against Iran over its
disputed nuclear programme.
On Wednesday, riot police fired tear gas, fought
demonstrators and arrested money changers in and around the
bazaar, one of the capital's main shopping areas. Ahmadinejad
blames speculators for the rial's slide, which is eating into
living standards and destroying jobs in the industrial sector.
The involvement of the Grand Bazaar in the protests was
politically significant because merchants from the area were key
supporters of Iran's Islamic revolution in 1979. Some traders
said they shut their shops this week as part of the protests,
while others cited fears over their safety.
"It is business as usual today. Shops are open and we are
serving customers. Of course we are also watching the currency
rates to see what is going to happen," one merchant told Reuters
by telephone on Saturday, declining to be named because of the
political sensitivity of speaking to foreign media.
Another said, "The dominant thing on every merchant's mind
is concern for tomorrow. What really bothers us is the
instability of the prices, even more than the high value for the
dollar. Merchants need to be able to plan for their business and
with instability in currency rates, that is almost impossible."
Ghassem Noodeh Farahani, head of a council of business
associations, was quoted by Fars news agency as saying all parts
of the bazaar had reopened with security forces present to
prevent any interference by "disruptors and agitators".
"The merchants have never wanted to cause disruption and
have always been friends and collaborators of the revolution,"
The sanctions, imposed because of Western suspicions that
Iran is developing nuclear weapons, have slashed the country's
hard currency earnings from oil exports, making it more
difficult for the central bank to support the rial.
Ordinary Iranians have rushed to convert their savings into
U.S. dollars to escape the rial's depreciation and avoid high
inflation, which the government says is running at about 25
percent but private economists put much higher.
Although staple foods and basic consumer goods produced
domestically are still generally available in Iran, the extreme
volatility of the currency and prices has in the past couple of
weeks begun to make some foreign products unavailable, Tehran
residents told Reuters.
A seller of imported personal computer equipment told
Reuters by phone he had halted sales because he could no longer
calculate what his products were worth in rials.
In a report to the United Nations General Assembly that was
released on Friday, U.N. chief Ban Ki-moon said the sanctions
were having a "significant" effect on Iran's people and also
seemed to be harming humanitarian operations in the country.
"Even companies that have obtained the requisite licence to
import food and medicine are facing difficulties in finding
third-country banks to process the transactions," he said.
But unless Tehran allows more international monitoring of
its nuclear energy programme, Iran's economic pain looks
unlikely to prompt Western governments to ease the sanctions,
and may even encourage them to take further steps.
Democratic Senator Robert Menendez, on the U.S. Senate's
Banking and Foreign Relations Committees, told Reuters this week
he was considering how to expand U.S. sanctions against Iran -
including how to freeze an estimated 30 percent of its foreign
currency reserves held in banks outside the country.
Meanwhile, the European Union has begun discussing the
possibility of a broad trade embargo against Iran, moving beyond
the energy, business and financial restrictions imposed so far,
EU diplomats said.