Iran entered a new phase of economic and political strain after street protests spread across multiple cities in late December. Demonstrations flared on Dec. 28 and 29 as merchants and shopkeepers shut stores in Tehran and marched in key areas, chanting anti-government slogans.
The catalyst was the currency’s slide and the inflation shock hitting daily life. Firstpost reported the unofficial exchange rate hit roughly 1.42 million rials per U.S. dollar on Sunday, versus about 820,000 a year ago, with inflation at 42.2% in December and food prices up 72% year over year. The “how” is straightforward: a collapsing rial drives import costs, squeezes inventories, and forces merchants to stop trading to avoid losses, which then spills into broader unrest.
Political pressure mounted quickly. The same report said Iran’s central bank chief resigned Monday, and parliament rejected the proposed budget, underscoring how hard it is for policymakers to promise relief without credible funding. CNN added that the protests were the largest since 2022 and described Supreme Leader Ali Khamenei as pursuing a cautious waiting game amid overlapping crises including drought and sanctions pressure.
Next steps likely include tougher enforcement against currency hoarding, attempted banking reforms, and further budget revisions, but those are unlikely to stabilize sentiment without a clear path on sanctions and external security risks. If you have exposure to the region, treat this as a volatility event. Monitor whether protests widen beyond merchant networks and whether policy responses restore basic market functioning.
