• Iranian rial plunged to historic low of 1.45 million per dollar, triggering shopkeeper strikes
• Food prices surged 72 percent as inflation reached 42 percent in December 2025
• Economic anger transformed into broader anti-regime movement calling for government change

TEHRAN, IR (TDR) — Iran’s largest anti-government demonstrations in three years erupted after the national currency collapsed to an all-time low, transforming what began as merchant protests over economic conditions into a nationwide movement challenging the Islamic Republic’s leadership. The protests that started December 28 in Tehran’s historic Grand Bazaar have now spread across all 31 provinces despite violent crackdowns and a total communications blackout.

The immediate trigger was the Iranian rial’s collapse to 1.45 million against the US dollar, a 56 percent drop in value over just six months. For ordinary Iranians, this meant the money in their pockets lost purchasing power almost overnight, rendering basic commerce incoherent and pushing everyday goods beyond the reach of families who were already struggling.

Economic Catastrophe Decades in Making

The currency crisis represents the culmination of years of economic deterioration rather than a sudden shock. When Mohammad Reza Farzin took office as Central Bank governor in 2022, the rial traded at approximately 430,000 to the dollar. By late December 2025, it had lost more than 70 percent of that value before his resignation amid the protests.

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Inflation reached 42.2 percent in December 2025, with some economists warning the country approaches hyperinflation. Food prices have surged 72 percent year-over-year according to official statistics, effectively making meat a luxury item. Health and medical supplies have increased 50 percent, straining families already dealing with reduced purchasing power.

The economic crisis has pushed between 27 and 50 percent of Iran’s population below the poverty line, a dramatic increase from 2022 levels. The Ministry of Social Welfare reported in 2024 that 57 percent of Iranians experience some level of malnourishment, while approximately 7 million people have gone hungry.

Why The Bazaar Matters

The protests gained significance because they originated with merchants in Tehran’s Grand Bazaar, a commercial center that played a crucial role in the 1979 Islamic Revolution that brought the current government to power. When bazaar merchants close their shops and take to the streets, it signals that the economic breakdown has reached the commercial core of Iranian society.

Mobile phone traders at the Alaeddin Shopping Center were among the first to shutter their businesses and demand government action. Iron traders followed suit, with the strikes quickly spreading to other sectors. Shopkeepers who depend on imports found themselves unable to price goods or secure supplies as exchange rate volatility made normal business operations impossible.

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The bazaar historically anchors regime legitimacy, making merchant-led protests particularly concerning for authorities. Unlike student movements or middle-class demonstrations over social freedoms, economic protests from the commercial class indicate fundamental system breakdown rather than ideological opposition.

Multiple Crises Converge

Iran’s economic collapse stems from multiple reinforcing factors beyond currency volatility. International sanctions reimposed through the United Nations snapback mechanism in September have frozen Iranian assets abroad and halted arms transactions. These measures compound sanctions that returned after the United States withdrew from the 2015 nuclear agreement.

The country faces a severe energy crisis with nationwide power outages lasting three to four hours daily. Rolling blackouts have forced half of Iran’s industrial capacity to halt operations, triggering an exodus of international corporations and investment. Domestic energy shortages persist despite Iran’s position as a major oil producer.

Water scarcity adds another dimension to the crisis. Iran now holds the global record for soil erosion, with restoration requiring roughly half of annual oil revenues according to forestry experts. The country’s water crisis threatens agricultural production and basic municipal services.

The June 2025 war between Iran and Israel, during which US and Israeli forces struck Iranian nuclear facilities, damaged infrastructure and heightened economic uncertainty. Fear of renewed conflict has contributed to capital flight and market anxiety.

Foreign Policy Versus Domestic Needs

Protesters increasingly direct anger at government spending priorities, with many chanting “Neither Gaza nor Lebanon, my life for Iran.” Critics accuse the regime of prioritizing foreign proxy groups like Hezbollah and Hamas over domestic economic stability.

The collapse of the Assad regime in Syria, a key Iranian ally, and the weakening of Hezbollah following Israeli military operations have left Iran’s regional position severely diminished. This geopolitical isolation compounds economic pressure while demonstrating limits of the government’s regional strategy.

President Masoud Pezeshkian’s administration attempted to address protester concerns by appointing a new Central Bank governor and removing university security managers. However, these gestures failed to stem demonstrations that have evolved beyond economic demands into direct challenges to the Islamic Republic system.

What began as shopkeeper strikes over currency devaluation has transformed into the broadest anti-government movement since the 2022 “Woman, Life, Freedom” uprising following Mahsa Amini’s death. The convergence of economic catastrophe, energy shortages, water scarcity, international isolation and government crackdowns has created what many analysts describe as the most serious threat to regime stability since the 1979 revolution.

Can Iran’s government survive an economic crisis that has united merchants, students and ordinary citizens against the regime?

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