Iran has been plunged into fresh economic and political turmoil after its national currency collapsed to a record low, sparking major street protests and forcing the resignation of the country's central bank governor.
Currency Collapse Ignites Widespread Unrest
The trigger for the crisis was the Iranian rial's precipitous fall against the US dollar. On Sunday 28 December 2025, the currency plummeted to 1.42 million rials to the dollar, before trading at around 1.38 million on Monday. This represents a catastrophic devaluation; when the now-resigned Central Bank Governor, Mohammad Reza Farzin, took office in 2022, the rate was approximately 430,000 to the dollar.
The currency's freefall ignited immediate and significant protests. Hundreds of traders and shopkeepers rallied on Saadi Street in central Tehran and in the Shush neighbourhood near the city's Grand Bazaar, a historic centre of commerce and political activity. The official IRNA news agency confirmed protest gatherings, with witnesses reporting similar rallies in other major cities including Isfahan, Shiraz, and Mashhad.
Police Response and Escalating Tensions
The demonstrations on Monday 29 December were reported to be the largest since the nationwide protests of 2022, which were triggered by the death of Mahsa Jina Amini. In some areas of Tehran, police fired tear gas to disperse the crowds. Witnesses told The Associated Press that traders shut their shops and urged others to join them, although some businesses remained open.
The protests had begun more quietly the previous day, limited to two major mobile phone markets in Tehran where anti-government slogans were chanted. The rapid escalation underscores public fury over an economic situation that is crippling household budgets.
Economic Fallout and Fears of Hyperinflation
The currency depreciation is compounding severe inflationary pressures. According to Iran's state statistics centre, the annual inflation rate in December rose to 42.2%, up 1.8% from November. The cost of basic necessities has skyrocketed, with food prices soaring 72% and health items up 50% compared to December last year.
Many economists and critics view these figures as a warning sign of approaching hyperinflation. The crisis is worsened by recent government measures, including a petrol price change, and reports of planned tax increases in the Iranian new year starting 21 March 2026.
The roots of the currency's weakness are deep, linked to international sanctions and geopolitical instability. The rial traded at just 32,000 to the dollar at the time of the 2015 nuclear deal, which unravelled after the US withdrawal in 2018. Ongoing uncertainty, including the risk of renewed conflict following the June war with Israel and the recent UN reimposition of sanctions via the "snapback" mechanism, continues to fuel market anxiety.
