Iran’s Rial Collapses to Record Lows, Protests Spread Nationwide

Iran’s financial and political tensions escalated this week after the rial tumbled to unprecedented levels on private open market platforms, sparking strikes and street protests and culminating in the resignation of central bank governor Mohammed Reza Farzin. State television and the official IRNA news agency reported Farzin’s resignation on Monday December 29, marking the highest-profile personnel casualty of a currency crisis that has deepened over more than three years.

The currency’s slide has been dramatic. When Farzin took office in 2022 the rial traded at roughly 430,000 per U.S. dollar. By late December 2025 private market exchange rates reached about 1.42 million rials per dollar on Sunday December 28 and were quoted around 1.38 to 1.41 million per dollar in open market trading on Monday. Gold and other safe haven assets also set record highs as market participants sought refuge from the sudden depreciation.

The exchange-rate shock has coincided with sharply higher consumer prices that are squeezing households and traders. Inflation is reported at about 42.2 percent year on year and food prices are reported up by roughly 72 percent, figures that have been circulated widely in the domestic press and among market analysts. The real income hit to working families has been compounded by limits on imports and lingering international sanctions that have constrained foreign exchange availability and eroded investor confidence.

The immediate public reaction took the form of shop closures and demonstrations in Tehran’s major market areas. Protest activity began in and around the Grand Bazaar precincts, including Saadi Street, the Shush neighborhood, Tajrish Bazaar and several downtown mobile market locations, and quickly spread to other cities. Hundreds of traders and shopkeepers rallied in the streets, many suspending business operations and chanting antigovernment slogans. Videos and eyewitness accounts indicate crowds grew as the movement reached university campuses, prompting the government to publicly offer dialogue to ease tensions.

Business leaders and market traders cited economic hardship and political uncertainty as reasons for the demonstrations, describing the collapse of the rial as a breaking point for small merchants living on narrow margins. Analysts say the currency rout amplifies cost pressures for import-dependent sectors and will likely feed further inflation unless authorities can stabilize foreign exchange markets or restore confidence through policy measures.

Official reactions have been mixed and at times contradictory. While state media confirmed Farzin’s resignation and a presidential office statement acknowledged the governor had submitted his resignation earlier in December, other official agencies pushed back on circulating reports about leadership decisions. Some reports suggested that Hemmati, a former central bank governor and ex-economy minister, could return to the post, but no comprehensive confirmation of a successor had been issued.

The government’s offer of dialogue signals recognition of the political as well as economic stakes. For policymakers the immediate challenge will be to halt the exchange-rate spiral and stem inflationary momentum without access to large external financing, a task made harder by sanctions and low reserves. For households and traders the question is whether short term concessions or a change in monetary management can restore purchasing power and reverse a wave of unrest now visible on streets and campuses across the country.