What's causing Iran's currency to collapse? (+video)

With Iran's official inflation rate running at around 25 percent, the rial's weakness threatens to increase the costs of industrial companies, worsening a recent spate of job losses in addition to reducing living standards.

Sanctions impact

But Ahmadinejad insisted on Tuesday that the impact of the sanctions had been manageable. Iran's imports totalled $26 billion in the first half of this year, down only moderately from $29 billion in the same period last year, he said.

"The central bank has provided all the currency for these imports," he said.

Many businessmen and ordinary citizens in Iran say the government is at least partly to blame for the currency crisis, and Ahmadinejad has been criticised for it by political enemies in parliament.

The rial has been depreciating for over a year and has lost about two-thirds of its value since June 2011. Its losses accelerated in the past week after the government launched an "exchange centre" to supply dollars to importers of basic goods; businessmen say the centre failed to meet demand for dollars.

"Eighty percent of our economic issues and problems are related to the system of management," parliamentary speaker Ali Larijani said on Tuesday, quoted by the Fars news agency.

Parliamentary news agency ICANA quoting Mohammad Bayatian, a member of parliament's industry and mines committee, as saying enough signatures had been collected to call Ahmadinejad to parliament for questioning over the rial's fall.

Iranian university students protested in front of parliament on Monday over a lack of government-subsidised dollars for their studies abroad, the Iranian Labour News Agency reported.

However, there is no clear sign that the criticism has reached a level that would force any change in the government.

The Iranian government has not released data showing the impact of the sanctions on living standards, but it can be glimpsed 150 kilometres (100 miles) across the Gulf in Dubai, traditionally a major centre of trade with Iran.

At the Dubai Creek, a crowded waterway from which motorised dhows ship goods to Iran, merchants said Iranian business had fallen off dramatically in the last two weeks.

"Everyone is losing; traders from Iran are losing because of the depreciating rial, and we're losing here because Iranians can't afford to buy our products any more," said Ahmed Mohammed Amin, 53, an Iranian trader who has lived in Dubai for 40 years.

"These are our worst days."

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