Executive Summary

Key insights and market outlook

Iran is experiencing severe economic turmoil in early 2026, marked by massive protests, currency collapse, and soaring inflation. The rial has plummeted to record lows against the US dollar, triggering widespread demonstrations that have turned violent ¹

²³. The protests, initially sparked by economic grievances, have evolved into broader political dissent across 17 provinces ².

Full Analysis

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Deep Dive Analysis

Iran's Deepening Economic Crisis and Mass Protests

Economic Turmoil and Currency Collapse

Iran is grappling with a severe economic crisis in early 2026, characterized by a dramatic collapse of its national currency, the rial, and skyrocketing inflation ¹

². The rial has hit record lows against the US dollar, with a 56% depreciation in just six months ¹. This currency crisis has led to a significant increase in living costs, with food prices surging by 72% compared to the previous year ¹.

Mass Protests and Civil Unrest

The economic hardship has triggered widespread protests that began with merchants in Tehran closing their businesses on December 28, 2025 ²

. The demonstrations quickly escalated and spread to 17 out of 31 provinces by New Year's Eve, drawing participants from various societal layers, including students and ordinary citizens ²³. The protests have turned violent in some areas, with reports of clashes between demonstrators and security forces resulting in multiple fatalities ².

Government Response and Economic Measures

In response to the growing unrest, the Iranian government has taken some measures, including the appointment of a new central bank governor, Abdolnaser Hemmati, who has pledged to restore economic stability ¹

. President Masoud Pezeshkian has also emphasized the government's commitment to economic reform and anti-corruption efforts ¹. However, the effectiveness of these measures remains to be seen as the protests continue.

International Context and Sanctions

The economic crisis in Iran is further complicated by international sanctions related to its nuclear program ²

. The International Monetary Fund (IMF) has projected inflation to remain above 40% in 2026, highlighting the deep-seated nature of Iran's economic challenges ². The situation is exacerbated by Iran's heavy reliance on imports and the impact of global economic isolation.

References