The Iraqi city of Kerbala is a popular destination for shi’ite pilgrims, often drawing in thousands every year, with many coming from neighboring Iran.
But a plunge in Iran’s currency, due to western sanctions, has been a blow to the thousands of Iranian pilgrims who make up the backbone of religious tourism in the city.
Traders say business is slow, and those who can afford to travel to Iraq say the country is expensive for them, “Our problem is the exchange rate, we could not shop and buy presents because it is very expensive. The rate of the rial has dropped so we could not shop because the price of goods is higher than our purchasing power,” said Iranian pilgrim Abbas Najfi.
‘‘We have many problems here because everything is expensive, including the prices of transportation,” added another Iranian pilgrim Kifani Kuwaini.
Due to Iran’s currency crisis, neighboring Iraq has emerged as an important source for dollars, especially as business ties have been growing rapidly.
Since the fall of Iraq’s Sunni dictator Saddam Hussein, its Shi’ite-led government has brought the country closer to Shi’ite power Iran.
Although Iraqi money changers are making profits from supplying dollars to Iran, some merchants now refuse to accept Iranian currency from travelers, preferring the safety of U.S dollars,
“The rate of the rial dropped heavily, so the exchange rate for a rial is 300 Iraqi Dinar, the price of rial was1250 Iraqi Dinar. There were many Iranian pilgrims before and all the hotels were packed with pilgrims but now there is a drop in the number of Iranian customers due to the fall in the Iranian currency. As you know, our work depends on Iranians, there was no problem before but now there are many problems, many hotels were shut down when the Iranian currency collapsed. The cost of [hotel] is by U.S.
dollars now, but the Iranians can’t afford dollars,” said Haider Abbas who owns a hotel in the city.
Traders also say they are paying the price for the reduction in tourists, “Of course, people’s purchasing power has been reduced because of the discounted dinars and the dollars, so business has slowed down and the number of Iranian visitors have dropped. Before, there used to be around 2000 to 2500 visitors every day, now there are about 400 to 500 visitors coming to Kerbala every day,” said shop owner Abu Essam.
The Iranian economy has taken a battering since the introduction of U.S. banking sanctions a year ago that virtually severed the country’s links to the global financial system.
As a result Iranians have seen the price of food and goods rocket and their spending power slump, especially regarding imports which are directly affected by the weakening rial.