Iran’s Rial Plummets Amid Protests and Sanctions, Reaching Record Lows
Tehran, 13 January 2026 – The Iranian rial has plunged to a historic low against the US dollar, exacerbating economic hardship and fuelling nationwide protests. With the currency trading at around 1.4 million rials per dollar in the free market, Iranians are grappling with soaring inflation and shortages of basic goods.
Currency Crisis Deepens
The rial’s depreciation accelerated in December 2025, following the reimposition of UN sanctions in September 2025 and a brief war with Israel in June. Official sources reported the rial reaching 1.46 million to the dollar on 13 January 2026, with the free-market rate fluctuating wildly. This collapse has wiped out savings and driven up prices, with cooking oil doubling in cost and staples like rice becoming scarce.
Protests erupted in late December 2025 in Tehran’s Grand Bazaar, spreading to over 280 locations across 27 provinces. Demonstrators, facing tear gas and arrests, have demanded economic reforms, with at least 36 deaths reported, including children. President Masoud Pezeshkian acknowledged the unrest, pledging subsidies but warning of limited government capacity amid sanctions.
Sanctions, blamed for reducing oil revenues by 20 per cent, have forced Iran to sell oil at discounts through indirect routes. The World Bank noted a decade of weak growth, with per-capita GDP contracting and poverty rising. Inflation hit 42 per cent in December 2025, eroding real wages and prompting calls for stability.
Key Facts
| Indicator | Value |
|---|---|
| USD/IRR Exchange Rate (Free Market) | Approximately 1.4 million rials per USD (as of 13 January 2026) |
| Annual Inflation Rate | 42 per cent (December 2025) |
| Oil Export Revenue Loss Due to Sanctions | Up to 20 per cent shortfall |
| Protests Locations | Over 280 sites in 27 provinces |
| Reported Deaths in Protests | At least 36 (including 4 children) |
Frequently Asked Questions
What caused the rial’s sharp depreciation?
The rial’s decline stems from international sanctions, economic mismanagement, and geopolitical tensions, including the reimposition of UN measures in September 2025 and a 12-day war with Israel in June 2025. These factors reduced foreign currency inflows and heightened demand for dollars.
How are sanctions impacting Iran’s economy?
Sanctions restrict oil exports, freeze assets, and limit trade, leading to discounted oil sales and indirect routes that cut revenues. Iran loses an estimated 20 per cent of potential oil earnings, contributing to inflation and poverty.
What measures has the Iranian government taken?
President Pezeshkian announced monthly subsidies of about A$7 per person and ordered investigations into protest-related incidents. The Central Bank ended some subsidised exchange rates, but critics say these are insufficient without broader reforms.
Could US intervention occur?
US President Donald Trump warned of intervention if protesters are killed violently, but analysts view this as unlikely due to Iran’s defences and regional risks. Tehran accuses the US of interference, framing protests as externally driven.