Iran’s Post-Protest Economic Breakdown: Currency Collapse, Market Panic, and Escalating Political Risk

Iran’s economy has entered a phase of acute instability following the recent nationwide protests and their violent suppression.

Iran’s economy has entered a phase of acute instability following the recent nationwide protests and their violent suppression. What distinguishes the current moment is not merely inflation or currency depreciation, but a simultaneous breakdown across foreign exchange, gold, and capital markets, driven by political shock, prolonged information disruption, and rising fears of external military escalation.

For the first time, the price of the U.S. dollar in Tehran’s informal market surpassed 150,000 tomans, with exchange dealers and online trading channels reporting levels above 152,000 tomans. Pricing in Tether (USDT)—a cryptocurrency widely used in Iran as a proxy for the dollar—has broadly confirmed these levels, underscoring the scale of market anxiety and the erosion of confidence in the national currency. The euro rose to over 181,000 tomans, while the British pound approached 209,000 tomans, each setting new historical records.

This currency shock coincided with a surge in global gold prices, with the international price of gold exceeding $5,000 per ounce. The impact on domestic markets has been immediate and severe: the Imami gold coin climbed to roughly 182 million tomans, while the new-design full coin exceeded 180 million tomans, pushing gold further out of reach for much of Iran’s middle class.

These sharp movements followed three weeks of widespread internet disruption, during which many markets were closed or operating only partially. During that period, exchange rates appeared largely frozen. The subsequent surge reflects both a release of suppressed demand and the return of acute political uncertainty.

The most striking indicator of systemic stress has emerged in the stock market. Under normal conditions, a weakening rial tends to lift the shares of export-oriented firms—particularly in petrochemicals and steel—whose revenues are dollar-denominated. This pattern has broken down. Instead, Iran’s main stock index fell by more than 114,000 points in a single session, closing near 4,000,974, marking the fourth consecutive trading day with losses exceeding 2 percent. Since the start of the week, the market has shed nearly 10 percent of its value.

The continued outflow of retail capital from the stock market points to a collapse of investor confidence and a belief that political and security risks now outweigh any inflation-hedging rationale. The simultaneous rise of the dollar and fall of equities signals not a conventional inflationary cycle, but growing fears of systemic disruption—reinforced by speculation over a potential U.S. military strike against Iran amid heightened regional tensions.

On the policy front, the government of President Masoud Pezeshkian has eliminated preferential exchange rates and shifted subsidies toward the end of the supply chain. While presented as a reform measure, this move has failed to stabilize currency or gold markets and has instead intensified public concern over accelerating living costs.

According to the Statistical Center of Iran, average consumer prices rose by 60 percent year-on-year from January 2024 to January 2025, the highest point-to-point inflation rate ever officially recorded by the agency. With the latest currency shock, inflationary pressures are expected to deepen further, particularly for essential goods and services.

The prolonged disconnection from the global internet has compounded the crisis. Government officials have acknowledged that the shutdown inflicts losses of at least $35 million per day, with especially severe consequences for digital businesses, online commerce, logistics, and service sectors. Over several weeks, the cumulative economic damage has been substantial.

Taken together, the convergence of currency collapse, soaring gold prices, stock-market decline, capital flight, and sustained information blackout reflects a profound loss of confidence in Iran’s economic and political trajectory. Absent a meaningful easing of political tensions, restoration of stable information flows, and reduction in the risk of external conflict, Iran’s economy is likely to remain locked in a volatile cycle of price shocks, declining investment, and intensifying pressure on households already burdened by many years of high inflation.