Economic Crisis Sparks Largest Protests in Three Years
Iran is experiencing its most significant wave of protests in three years as the national currency, the rial, plummeted to a historic low of 1.42 million to the US dollar on December 29, 2025. Hundreds of shopkeepers, traders, and students took to the streets in Tehran, Isfahan, Shiraz, and Mashhad, with police deploying tear gas to disperse crowds in some areas. According to CNN reports, this marks the largest public demonstration since 2022.
Central Bank Chief Resigns Amid Economic Turmoil
The economic crisis forced the resignation of Central Bank head Mohammad Reza Farzin, who had taken office in 2022 when the rial traded at 430,000 to the dollar. 'The currency collapse has created unbearable pressure on ordinary Iranians,' said economic analyst Parisa Hafezi. 'When the central bank governor resigns during such a crisis, it signals systemic failure.' The rial's dramatic depreciation represents a staggering 230% devaluation during Farzin's tenure.
Soaring Inflation and Price Hikes
Iran's inflation rate reached 42.2% in December, with food prices soaring 72% year-over-year and medicine costs increasing by 50%. The government recently raised gasoline prices for the first time since 2019, adding to the economic burden on households. 'We cannot afford basic necessities anymore,' said Tehran shopkeeper Ali Reza, who participated in the protests. 'My family's purchasing power has been cut in half over the past year.'
International Sanctions and Regional Tensions
The economic crisis has been exacerbated by renewed United Nations sanctions that took effect in September 2025. According to U.S. State Department documents, the 'snapback' process reimposed restrictions from six UN Security Council resolutions due to Iran's 'significant non-performance' of its nuclear commitments. These sanctions have frozen Iranian assets abroad and restricted international trade.
Regional tensions with Israel have also contributed to economic uncertainty. The brief war between Iran and Israel in June 2025 caused billions in damage and loss of revenues, further straining the economy according to Wikipedia's analysis of Iran's economic challenges.
Political Implications and Opposition Voices
The protests have taken on political dimensions, with demonstrators chanting anti-government slogans and calling for the return of Reza Pahlavi, the exiled son of Iran's last monarch. Pahlavi, who lives in exile, has publicly called on Iranians to join the protests. 'The Iranian people deserve freedom and economic dignity,' Pahlavi stated in a recent message.
The government's proposed budget for 2026, which includes significant spending cuts and tax increases, has further fueled public anger. Many Iranians see these measures as transferring economic burdens to ordinary citizens while failing to address systemic corruption and mismanagement.
Historical Context and Future Outlook
Iran's economy has faced chronic challenges since the 1979 Islamic Revolution, including high inflation, international sanctions, and structural inefficiencies. The country possesses 10% of the world's proven oil reserves but has struggled to translate this wealth into economic stability for its citizens.
As protests continue, analysts warn that the economic crisis could deepen social unrest. 'This isn't just about inflation numbers,' said Middle East expert Leila Alikarami. 'It's about people's daily survival and their growing frustration with a system that has failed to deliver economic justice.' The coming weeks will test both the government's ability to manage the crisis and the protesters' determination to demand change.