Iran is facing one of the most acute economic breakdowns in its post-revolutionary history, as a collapsing currency, a deeply unpopular austerity budget and growing public unrest converge into a widening national crisis.
The turmoil erupted as parliament debated a stringent austerity bill, coinciding with a sudden collapse of the toman, which lost more than 10 percent of its value within hours.
The US dollar surged past 145,000 tomans, marking the highest exchange rate ever recorded in Iran. Since President Masoud Pezeshkian assumed office, the national currency has effectively lost nearly 200 percent of its value, an unprecedented deterioration both before and after the 1979 revolution, reports Al-Jarida daily.
The market shock was intensified by President Masoud Pezeshkian’s public admission that the government lacks a viable solution, coupled with his acknowledgment that the state treasury is depleted.
His remarks sent shockwaves through financial markets and ignited fury inside parliament, where lawmakers reacted angrily to what they described as deflection and helplessness. Attempts by the president to invoke religious texts during the session were met with sharp rebukes, further deepening political tensions.
As confidence evaporated, Tehran’s historic Grand Bazaar shut its doors, with traders protesting soaring taxes, rampant inflation, currency scarcity and severe disruptions to commercial activity.
Demonstrations spilled into the streets, triggering fears that unrest could spread beyond the capital to other provinces, particularly as living costs spiral out of control.
The proposed budget has emerged as a flashpoint. It relies heavily on tax hikes of up to 60 percent, shifts away from oil revenues, and limits wage increases to 20 percent, despite official inflation exceeding 55 percent and unofficial estimates surpassing 80 percent. Critics argue that the budget preserves massive allocations to cultural, religious and media institutions — most notably the state broadcaster — despite widespread perceptions of inefficiency and declining public trust.
Amid the escalating crisis, the president’s office confirmed that Central Bank Governor Mohammad Reza Farzin has submitted his resignation, a move widely seen as acknowledgment of policy failure. Analysts warn that leadership changes alone will not stabilize the currency without structural reforms and restored market confidence.
Iran’s difficulties are compounded by a severe shortage of hard currency, exacerbated by banking policies and the refusal of major exporters to repatriate foreign earnings. Iranian media have described this standoff as a form of “economic cartel,” driven by discrepancies between official and market exchange rates. At the same time, billions of dollars in Iranian funds held abroad — particularly in neighboring countries — remain inaccessible due to sanctions and US restrictions.
The strain is further visible on the regional stage. President Recep Tayyip Erdoğan’s visit to Tehran comes amid discussions over extending gas supply contracts, raising questions about Iran’s ability to meet commitments as doubts grow over payment mechanisms and financial liquidity.
Against this backdrop of economic fragility, Iranian officials sought to project military resilience. A senior source in the Ministry of Defense confirmed that all missile bases damaged during the recent 12-day conflict have been fully rehabilitated, with fortifications proving effective against Israeli and US strikes. According to the source, Iran has also expanded its missile infrastructure, established new bases and increased ballistic missile production to record levels.
The stark contrast between economic collapse at home and strategic posturing abroad underscores a widening imbalance that analysts say could define Iran’s trajectory in the months ahead — one marked by currency instability, political volatility and rising social pressure.
