Iran will overcome currency "conspiracy", Khamenei ally says

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Riot police fought demonstrators and arrested money changers in and around the bazaar on Wednesday during demonstrations triggered by the collapse of the rial, which has lost around a third of its value against the dollar over the last week.

Protesters called President Mahmoud Ahmadinejad a traitor because of what many say is his serious mismanagement of the economy, which has also been badly hit by Western sanctions imposed over its nuclear programme.

But there has so far been no public criticism of Iran's most powerful authority, Ayatollah Ali Khamenei.

"Iran is overcoming the psychological war and conspiracy that the enemy has brought to the currency and gold market and this war is constantly fluctuating," Gholam Ali Haddad Adel, an adviser to Khamenei, said in a report by the semi-official Fars news agency.

"The arrogant powers, in their crude way, think that the nation of Iran is ready to let go of the Islamic revolution through economic pressure but we are establishing Iran's economic strength," he said.

Haddad Adel is an ally of Khamenei and father-in-law to his son Mojtaba.

Most of the bazaar remained shut on Thursday with police patrols in evidence. Analysts say any further discontent could spread quickly if it is allowed to gain a foothold.

Business associations said the bazaar would reopen on Saturday with security forces present. It is traditionally closed on Fridays.

The bazaar, whose merchants were influential in bringing an end to Iran's monarchy in 1979, wields significant influence and this week's unrest is a clear signal that the economic hardship already faced by many Iranians is also being felt by merchants.

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