Iran’s rial crashes to 1.4 million per dollar. (Photo: Canva)
Iran is staring at one of the darkest economic moments in its modern history as the national currency, the rial, plunges to an unprecedented 1.4 million per US dollar.
The historic collapse, driven by soaring inflation, international sanctions, war-related disruptions, and prolonged political instability, has pushed the country toward deep recession and widespread poverty.
For Iran’s middle and working classes, the currency crash is not just a financial statistic it is a daily struggle for survival.
Iran’s economy has been battered by years of sanctions and mismanagement, but the recent fall of the rial marks its most dramatic collapse yet.
As of late December 2025, the unofficial exchange rate crossed the psychologically devastating mark of 1.4 million rials per US dollar, wiping out nearly 90 percent of the currency’s value since 2018.
To put the crisis in perspective, one US dollar was worth just 70 rials during the 1979 Islamic Revolution. Over four decades, the currency has lost value by nearly 20,000 times.
In 2025 alone, the rial depreciated by approximately 45 percent, triggering panic across the country as citizens rushed to convert their savings into dollars, gold, or other hard assets.
The economic collapse has been accelerated by a combination of geopolitical and domestic shocks. The 12-day conflict with Israel in June 2025, followed by US strikes on Iranian nuclear facilities and renewed UN sanctions over nuclear activity, severely restricted Iran’s access to foreign currency and global markets.
Long before the war, Iran’s economy was already weakened by oil marketing restrictions imposed during Donald Trump’s presidency in 2018, which slashed export revenues and depleted foreign exchange reserves.
The cumulative effect of sanctions, war, and dwindling oil income has crippled the state’s ability to stabilise the currency.
As the crisis spiralled out of control, Iran’s Central Bank chief Mohammad Reza Farzin resigned in December 2025, underscoring the gravity of the situation and the government’s failure to arrest the currency collapse.
Iran’s inflation rate officially stands at 42.2 percent, though independent estimates suggest the real figure is significantly higher. Salaries, however, have remained largely stagnant, eroding purchasing power at an alarming pace.
Essential goods including food, medicine, fuel, and household supplies have become unaffordable for large sections of the population.
The government’s decision in late 2025 to remove the “preferential” exchange rate for essential imports further worsened the crisis. Prices of basic staples such as cooking oil, wheat products, and chicken doubled almost overnight.
For millions of Iranian families, the removal of subsidies marked the final blow, pushing them below the poverty line.
The currency crash has hit Iran’s middle and working classes the hardest. Once considered the backbone of urban stability, the middle class has seen decades of savings evaporate in months.
Bank deposits are rapidly losing value, pensions are shrinking, and home ownership is slipping out of reach.
The working class, meanwhile, may struggle to afford even basic necessities. Rising food prices, transport costs, and rent have forced families to cut consumption, withdraw children from schools, and delay medical treatment. Informal employment and daily wage labour are increasingly becoming survival strategies.
As confidence in the rial collapses, many households may turn to black markets for foreign currency, gold trading, and informal savings networks further weakening the formal economy.
Public anger over the economic crisis erupted in December 2025, when merchants at Tehran’s historic Grand Bazaar shut down their shops in protest.
The bazaaris, traditionally seen as conservative supporters of the establishment, took to the streets after the currency’s hourly fluctuations pushed them into massive debt.
The strike, which began on Jomhouri Avenue, quickly spread to students, workers, and professionals. By early January 2026, protests had expanded to all 31 provinces, evolving from economic demonstrations into open calls for regime change.
The unrest has also been fuelled by lingering anger over the death of Mahsa Amini in police custody in 2022, which had already exposed deep fractures between the state and society.
What began as protests against inflation and currency collapse has now transformed into a broader political uprising.
Demonstrators are no longer demanding reforms or subsidies; they are calling for the dismantling of the Islamic Republic.
For the first time in decades, chants supporting the return of the Pahlavi monarchy, including slogans like “Long live the Shah,” have been heard even in traditionally religious cities such as Mashhad and Qom.
Observers say this shift reflects the erosion of the regime’s ideological legitimacy alongside the collapse of the rial.
In response, Iranian authorities have resorted to heavy-handed measures. A near-total internet blackout has been imposed to disrupt protest coordination, while security forces including the Basij militia and Revolutionary Guards have used tear gas and live ammunition.
Human rights organisations estimate that dozens have been killed and thousands arrested, yet the crackdown has failed to suppress the growing movement, which continues to draw strength from economic desperation.
According to the World Bank, Iran is facing a severe recession, with GDP projected to shrink by 1.7 percent in 2025 and 2.8 percent in 2026.
Without sanctions relief, foreign investment, or structural reforms, economists warn that the rial’s collapse could become irreversible.
For Iran’s middle and working classes, the question is no longer about economic recovery but survival. As savings vanish and poverty deepens, the currency crash has exposed not just a financial crisis but a profound crisis of governance, legitimacy, and the future of the Iranian state.
Sofia Babu Chacko is a journalist with over five years of experience covering Indian politics, crime, human rights, gender issues, and stories about marginalized communities. She believes that every voice matters, and journalism has a vital role to play in amplifying those voices. Sofia is committed to creating impact and shedding light on stories that truly matter. Beyond her work in the newsroom, she is also a music enthusiast who enjoys singing.
REET Mains Admit Card 2026: The Rajasthan Staff Selection Board (RSSB) is likely to release…
Nora Fatehi’s Morocco visit and an Instagram like by football star Achraf Hakimi spark dating…
Chinese Money Laundering Kingpin Charged In US For Aiding Sinaloa Cartel, All You Need To Know
A Chinese-American man, Lin Yan, has been charged in the US for laundering tens of…
