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The app destroying Iran’s currency

An Iranian traveler arrives at a bus terminal in Tehran on Jan. 13. (Atta Kenare/AFP/Getty Images)
An Iranian traveler arrives at a bus terminal in Tehran on Jan. 13. (Atta Kenare/AFP/Getty Images)
Iranians are using the messaging app Telegram to spread fake news about the rial—and make a profit for themselves

Iranian President Hassan Rouhani owes his re-election in large part to the messaging app Telegram. During Iran’s 2017 presidential election, Iranians relied on the app as a rare source of uncensored news about the race, in which Rouhani was not the candidate most favored by hard-liners.

Just one year later, Telegram may end up becoming Rouhani’s downfall. The app is at the center of Iran’s accelerating currency crash.

The Iranian rial was generally acknowledged to have been on a stable path until May, when U.S. President Donald Trump exited the Iran nuclear deal. Prior to the U.S. withdrawal, one U.S. dollar was worth around 37,000 rials; immediately afterwards, a single dollar jumped to around 44,000 rials. The rial has continued to slump ever since, dropping to 50,000 to the dollar, and then 80,000 rials, and then 190,000 during Rouhani’s speech at the United Nations General Assembly in September. Right now, it is at 120,500 rials.

But it isn’t just U.S. sanctions and the fundamental weaknesses of the Iranian economy that have contributed to Iran’s currency freefall. It’s also the deliberate circulation of rumors and fake news on Telegram by Iranian currency traders and middlemen out to make a profit.

As soon as it became clear that the United States would reimpose sanctions, many middle-class and wealthy Iranians felt a temptation to engage in currency trading, having concluded that the value of the rial would soon decline. For all these Iranians, the goal was to buy dollars. Some Iranians even sold their homes and invested the proceeds in dollars to preserve the value of their assets—or, simply, to secure a profit.

The fire sale of Iranian rials served to weaken the rial even further, and the Iranian government tried to arrest it in various ways, including by banning the official sale of foreign currency. But this only served to make the currency-trading market less transparent—and, correspondingly, more exploitative.

There has always been a gap between the more sophisticated currency traders and those driven by ignorance and fear, but the informal marketplace widened it. That has become especially evident on Tehran’s Ferdowsi Boulevard, the center of Iran’s informal money-changing economy, where anyone can bring rials in cash and walk away with U.S. bills.

In one instance on Ferdowsi, I recall seeing one elderly women bring the equivalent of her entirely yearly income and exchange it at a rate of 170,000 rials to the dollar—an offer significantly below what the rial was then worth, even as the consensus was that the currency was probably undervalued at that moment. The rial has yet to weaken to the point that the woman’s bet would have paid off.

Iran’s professional money traders increasingly use Telegram to exploit the black market’s lack of transparency to maximize their own profits, at the expense of their Iranian clients—and to the distress of the Iranian government. As one of the few social media or messaging apps that the Iranian government doesn’t censor, Telegram—specifically, the news feeds on its “channel” function, which allow posts to be distributed to anyone who chooses to sign up for them—has become one of the most trusted sources of news for Iranians, displacing state media and even ostensibly independent newspapers.

When the rial entered its ominous trajectory earlier this year, currency traders began creating hundreds of channels on Telegram, instantly announcing any shifts in the dollar price and offering broader market and purchasing advice for the coming days. Iranians have joined these channels in such large number—some feeds have more than 2 million members—that they have themselves become a force capable of influencing the currency exchange rate.

The currency traders who run these information outposts are increasingly using them to distribute distorted economic news. For example, in recent weeks, as the rial began to regain value, the currency-trading Telegram channels resisted the positive news. Some simply delayed reporting the rising prices; others even announced entirely false prices. Many of the channels also ignored the positive trends in favor of promoting negative analyses about the negative effects of U.S. oil sanctions on Iranian currency.
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