Iran's Currency Has Collapsed: What It Means Now to Its People, the World

The Iranian rial has effectively collapsed, plummeting to an unprecedented low of more than 1.47 million per US dollar on unofficial markets this week. The currency crash has triggered a wave of nationwide 'revolutionary' protests, as the cost of basic survival spirals out of reach for millions of Iranians.

On Monday, 12 January 2026, the dollar was quoted as high as 1.47 million rials in the 'free market' of Tehran, marking a catastrophic decline from 2025 levels. For comparison, the rial traded at roughly 70 to the dollar during the 1979 revolution; it has now lost approximately 20,000 times its value over four decades, according to The Economic Times.

Economic Paralysis

The currency devaluation has pushed Iran's annual inflation rate past 42%, with food prices surging by more than 70% in some sectors. The impact on daily life is described by residents as 'crushing,' with reports suggesting that meat has become a luxury item unaffordable for over 7 million citizens.

The economic strain is largely attributed to a 'perfect storm' of external and internal factors. In June 2025, Israeli strikes damaged a centrifuge workshop in Isfahan, confirmed by the IAEA. UN snapback sanctions were restored in late September, followed by expanded US measures and a renewed 'maximum pressure' policy earlier in 2025.

'The real indicator in Iran is the dollar–rial exchange rate, because the prices of goods, rent, and transportation all depend on it,' an expert told The New Arab. As the rial plummeted, shopkeepers in Tehran's historic Grand Bazaar—traditionally a bastion of regime support—shuttered their stalls in protest, sparking the current wave of unrest.

The 'New Revolution' and State Crackdown

What began in late December 2025 as a protest against the 'broken' economy has rapidly evolved into a political uprising calling for the end of the Islamic Republic. Protesters have moved beyond economic grievances, chanting 'death to the dictator' and targeting symbols of state power, according to The Guardian.

The human cost of the crisis is mounting. Human rights group HRANA and other sources indicate that at least 29 protesters have been confirmed killed in the first nine days of 2026, though some think tanks like the Brookings Institution suggest that during internet blackouts, the actual death toll may have reached into the thousands.

In response, the Iranian government has halted internet and phone networks to isolate the movement. Security Council Secretary Ali Larijani has shifted the state's rhetoric, now labelling protesters as 'urban semi-terrorists' rather than rioters—a move analysts believe is intended to justify a more lethal military crackdown, as reported by the Institute for the Study of War.

Bitcoin as a Financial 'Exit'

With trust in the national currency evaporated, many Iranians are reportedly turning to alternative assets. Bitcoin adoption has seen a 'quiet rise' as a hedge against the rial's failure. According to Bitcoin Magazine, users are increasingly using mesh networks and Bluetooth-based apps to trade digital assets and communicate during state-imposed internet blackouts.

However, for the average family, the immediate concern remains the cost of bread and medicine. As the World Bank projects Iran's GDP to contract by 2.8% in 2026, the Islamic Republic faces a 'decisive moment' where economic mismanagement may prove a greater threat to its survival than external military pressure.