Iran is facing its largest street demonstrations in years as crowds in Tehran and other cities protested a worsening economy after the rial plunged to record lows.
The rallies began Sunday and grew Monday, December 28–29, 2025, as the currency slid to 1.42 million rials per U.S. dollar on Sunday before firming slightly to about 1.38 million on Monday. Shopkeepers staged walkouts around Tehran’s Grand Bazaar and traders in key commercial districts closed stores, citing collapsing purchasing power and steep price swings.
President Masoud Pezeshkian urged officials to hear the “legitimate demands” of demonstrators and instructed the interior ministry to meet representatives of protesters.
State media carried images of police dispersing crowds with tear gas as authorities warned against unrest. Late Tuesday, the president accepted the resignation of central bank chief Mohammad Reza Farzin, who stepped down amid the currency rout.
Currency plunge and inflation shock
The currency’s drop has fed fears of spiraling prices and eroded savings across middle- and low-income households. The Statistical Center of Iran reported annual inflation of 42.2% for December, up 1.8 percentage points from November.
Food prices were the most punishing, with year-over-year increases reported at about 72%, while health and medical items rose roughly 50%, according to recent summaries of official data.
Families describe a relentless climb in the cost of staples, from dairy and bread to cooking oil and meat, while rents and transport fares have tracked higher. Retailers dependent on imports say they cannot reliably price goods when exchange rates are shifting by the hour. Many wholesalers paused sales or demanded cash to hedge against further depreciation.
Economists point to a cluster of pressures: long-running sanctions that limit oil and banking access, fiscal deficits, shallow foreign-exchange buffers, and a loss of public confidence that encourages dollarization. The result is a cycle in which each currency dip quickly feeds into shelf prices, leaving wages behind.
Where and how protests spread
The latest round began with merchant strikes and shop closures around the Grand Bazaar, a venue with historical weight that recalls 1979 when bazaaris helped upend the monarchy.
Videos shared on social media showed crowds chanting against clerical leaders and the government’s economic management. In some locations, police moved to clear streets and fired tear gas, while other gatherings dispersed without clashes.
Authorities announced that government offices and schools in several provinces would shut Wednesday, citing cold weather and energy conservation. Protesters called the measure a pretext to discourage demonstrations. Officials say the closures are part of a national plan to stabilize power demand during a cold snap.
Policy churn at the central bank
Mr. Farzin, central bank governor since late 2022, had faced mounting criticism as the rial slid through successive thresholds.
His resignation became public Monday; by Tuesday, the presidency said it had been accepted. Markets are now watching for who will take the helm and for any early signals on exchange-rate policy, bank supervision, and liquidity management.
Analysts say leaders face a difficult mix of priorities: slowing inflation without choking a weak economy, stabilizing the currency without draining scarce reserves, and repairing battered confidence without a quick fix for structural problems.
Credible steps could include clearer currency-market operations, curbing off-budget spending, and tackling banking-sector vulnerabilities. None is likely to deliver immediate relief at the checkout line.
