DUBAI, Oct 4 (Reuters) - An Islamic trade association in Iran strongly condemned the protests that flared in Tehran's main bazaar as an enemy conspiracy and said traders had dealt with the "treacherous" acts, Iran's state news agency reported late on Wednesday.
Riot police clashed with demonstrators and arrested money changers in Tehran on Wednesday afternoon in disturbances over the collapse of the Iranian currency, which has lost 40 percent of its value against the dollar over the last week.
The Iranian economy has stuttered badly since the start of the year as tough sanctions imposed by the United States and its allies targeting Iran's oil exports and banking sector have resulted in higher inflation and a surge in unemployment.
"A number of suspects linked to the enemies of Islam sought to close the market by creating fear, but fortunately Muslim merchants rose up and stopped the conspiracy," the Society of the Islamic Associations of Tehran's Guilds and Bazaar said in a statement.
Nearly all sectors of Tehran's bazaar were closed on Wednesday, a sign of the seriousness of the state of Iran's economy, analysts said. Tehran merchants played a major role in Iran's 1979 revolution.
"Merchants have condemned these treacherous actions and will not allow the enemies to achieve their goals," the statement added.
The statement also blamed the Iranian dissident group Mujahadin-e Khalq for causing the unrest in Tehran's bazaar, which spread to surrounding streets where police fired teargas to disperse protesters.
The U.S. State Department removed the group - which calls for the overthrow of Iran's clerical leaders - from its official list of terrorist organisations last week, saying the group had renounced violence.
The Society of the Islamic Associations of Tehran's Guilds and Bazaar was established after the Iranian revolution and analysts say it acted as a monitoring orgnaisation for profiteering and anti-government activities in the bazaar.
The rial's 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.
Websites providing rates for the rial stopped updating on Tuesday, and Dubai money changers said trade had ground to a halt because of the confusion in Tehran.
(Reporting By Marcus George)
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Keywords: IRAN CURRENCY/PROTESTS