Tehran - Scuffles broke out in central Tehran in the first sign of unrest over Iran's plunging currency, which has lost more than half its value since last week in a crisis Washington said is of its own making.
Hundreds of police in anti-riot gear stormed the currency exchange district of Ferdowsi on Wednesday, arresting illegal money changers and ordering licensed exchange bureaux and other shops closed, witnesses said.
Uniformed police and plain-clothes security officers were seen carrying out arrests.
The Mehr news agency said two Europeans were among those arrested, for allegedly trying to report on the situation under the guise of being tourists.
It gave no other details and no Western embassy immediately confirmed that any of its citizens had been detained.
Smoke rose above the scene. Some appeared to come from at least two dumpsters set on fire, one of which was near the British embassy - evacuated last year after pro-government demonstrators stormed it.
Police to take action
The source of other smoke could not be determined, with police directing pedestrians and vehicles away.
Individuals threw stones at police officers and a police car before running away, witnesses said.
A protest in Tehran's historic Grand Bazaar - a maze-like complex of shops vital to the city - also took place but was quickly put down by police.
"We closed because we don't know what is going to happen" in terms of the currency market, one shopkeeper said.
Mehr quoted Colonel Khalil Helali as saying police were going to take action against shopkeepers who closed their businesses, for "disturbing" the situation.
He played down the extent of the protests, saying "the presence of people and onlookers does not mean a demonstration or a closure, and we had no reports of the bazaar closing".
BBC signal jammed
Mehr said the situation in central Tehran had returned to normal late on Wednesday.
Journalists for foreign media in Iran were not permitted to go to the area to confirm events there and had to rely on eyewitness accounts.
The BBC reported that viewers inside Iran had said the signal for its Persian-language service had been jammed after it reported the protests.
The crackdown was an apparent bid to halt a dramatic plunge in the value of Iran's currency this week.
On Tuesday, President Mahmoud Ahmadinejad said Western sanctions were mostly to blame. But rivals said his economic mismanagement was the main cause.
Supreme leader Ayatollah Ali Khamenei vowed again that Iran would not cede to Western pressure over its disputed nuclear programme.
"The aim of the pressure against the Iranian people is to make it yield. But it will never yield. That's why the enemy is angry," he said in a speech reported by the ISNA news agency.
Money changers said virtually no transactions were taking place in the market, making any valuation unreliable, but the rate was estimated to be around 36 000 to the dollar, about the same level as at the close of trade on Tuesday.
Online websites that normally track the currency market were censored, none giving the rial's value against the dollar.
A week ago, the rial was trading at around 22 000 to the greenback and at 13 000 a year ago.
The plunge has greatly increased inflation in Iran, which is widely seen as far higher than the official 23.5% cited by the central bank.
The US government has said it sees the rial's fall as proof Western sanctions are having a big impact on the Islamic republic's economy.
But Ahmadinejad said that, even with the "psychological war on the exchange market", Iran would not be pressured into curbing its nuclear activities - the stated aim of the sanctions.
"We are not a people to retreat on the nuclear issue," he told a news conference in Tehran.
US Secretary of State Hillary Clinton said Tehran was to blame.
"I think the Iranian government deserves responsibility for what is going on inside Iran, and that is who should be held accountable," Clinton said in Washington.
"Of course the sanctions have had an impact as well but those could be remedied in short order if the Iranian government were willing to work with the P5+1 and the rest of the international community in a sincere manner."
The P5+1 - the six powers leading the nuclear negotiations with Iran - are seeking reassurances that Iran is not seeking covertly to develop a weapons capability. Tehran denies any military ambition and insists its nuclear programme is for civilian purposes only.
On Tuesday, the UN human rights office expressed concern at the arrests and imprisonment of rights activists and journalists over the past two weeks.