Iran's bazaar merchants squeezed as rial hits record low

Iranian bazaar merchants are grappling with a collapsing currency, weaker consumer demand and rising costs, as new US sanctions threaten to exacerbate an ongoing economic crisis. At Tehran’s Grand Bazaar, a shopkeeper observed unusually empty lanes, noting that customers were scarce even before the new school year when families typically purchase essentials like stationery and clothing.

The shopkeeper lamented the situation, saying, “With the dollar at 2,000,000 rials, what kind of scenario is this?” He explained that merchants are compelled to lower margins to entice shoppers, emphasizing that the focus has shifted from making sales to merely keeping the business afloat.

Merchants across Iran face a similar predicament, with prices soaring while households' purchasing power wanes. Some are grappling with mounting rents, as shopfronts in Tehran’s Grand Bazaar have seen rent hikes. One merchant lamented the dire state of affairs, stating, “You [the authorities] know we’re tired. This is the end of the road.

Really, in my view, it can’t continue.” In Bandar Abbas, a port city on the Strait of Hormuz, merchants blamed the US sanctions for worsening economic hardship while expressing confidence that Iran would navigate around the pressure. They acknowledged the strain imposed by the sanctions and the weakening rial, but maintained that Iranians possessed the resilience to overcome such challenges.

The rial, which has plummeted to an all-time low of more than two million against the US dollar, compared to 1.53 million rials just three months ago, has led to higher costs for imported goods and diminished consumers' ability to afford them. The current sanctions, announced by the US on Monday, extend to additional individuals, companies, vessels, and sectors such as gold, shipping, aviation, and technology, further complicating the merchants’ plight amidst a backdrop of inflation, currency depreciation, and declining living standards.