TL:DR: Driving the news
Iran is again convulsed by nationwide unrest - but this time the spark is not culture or identity. It is money.
- The Iranian rial’s plunge to roughly 1.4 million per US dollar in late December shattered already fragile markets and triggered strikes in Tehran’s Grand Bazaar.
- What began as merchant walkouts has cascaded into protests spanning students, truck drivers and ordinary households across all 31 provinces, amid rolling internet blackouts and power cuts.
- US-based Human Rights Activists News Agency estimates at least 2,000 deaths and more than 10,000 arrests.
- This is the largest and most economically broad-based challenge to the Islamic Republic since the regime crushed the 2022 “Woman, Life, Freedom” movement.
Why it matters
- The current unrest strikes at the Islamic Republic’s most sensitive nerve: its ability to provide economic survival, not ideological legitimacy.
- Unlike earlier uprisings centered on social freedoms, this revolt is pulling in lower-income Iranians and the shrinking middle class at the same time, a convergence analysts told Foreign Policy has long worried the regime.
- Bazaar strikes carry historic weight. Merchants were pivotal in the 1979 revolution, when coordinated economic noncooperation accelerated the shah’s fall. The parallel is imperfect - but not lost on Tehran.
- Regionally, Iran is more exposed than at any time since the revolution. Its proxy network has been degraded, Syria’s Assad fell in 2024, and Israel damaged Iran’s missile and nuclear infrastructure in the June 2025 war, per Bloomberg.
- In short: the state is poorer, weaker abroad, and facing a broader domestic coalition than before.
The big picture
The immediate trigger was a policy fight over Iran’s preferential exchange rate, set at 285,000 rials per dollar - a system widely viewed as a corruption pipeline for regime insiders.
President Masoud Pezeshkian’s administration argued the rate fuels rent-seeking and distorts markets.
When parliament rejected the budget proposal, confidence collapsed. The rial slid, inventories became impossible to price, and normal commerce froze - especially in import-heavy sectors like electronics and mobile phones.
The graph from a currency tracker shows $1 equal to nearly 1,137,500 Iranian rials as of January 12. In purely technical terms, it’s just a graph. In political terms, it’s a snapshot of governance failing at the level of daily life: The point where normal pricing stops working, salaries become fiction, and a middle class realizes it is being pushed into survival mode.
As one Iran-based source told Foreign Policy, the rage was twofold: Anger at corruption and fear that removing subsidies without safeguards would immediately spike food prices. That mix turned a technical debate into a street-level revolt.
Zoom in: life under collapse
For many Iranians, the crisis is no longer about hardship - it’s about survival.
- Water rationing now hits parts of Tehran for hours at a time, while other districts face rolling blackouts.
- Food insecurity has spread into once-stable households. One source described seeing a man tear chicken wings off in a supermarket and flee - a scene echoed by similar accounts in Western reporting.
- Inflation, already above 40% for years, has hollowed out wages. Economists cited by the NYT estimate purchasing power has fallen to a third or less of what it was a decade ago.
- The protests’ geographic spread - from major cities to marginalized provinces already battered by drought and poverty - reflects this shared precarity.
What they are saying
We are struggling. We cannot import goods because of US sanctions and because only the Guards or those linked to them control the economy. They only think about their own benefits.
A Tehran trader to Reuters
The regime’s message is clear: sympathy on the surface, repression underneath.
Judiciary chief Gholamhossein Mohseni Ejei vowed “no leniency” for those deemed “rioters,” urging judges to move quickly and “firmly”.
Foreign minister Abbas Araghchi claimed the situation was “under total control,” blaming Israel and the US for violence while saying Iran remained “open to diplomacy” in comments carried by Al Jazeera.
Supreme Leader Ali Khamenei warned the Islamic Republic “will not back down”.
Outside Iran, President Donald Trump has raised the stakes. He warned publicly that if Tehran “shoots and violently kills peaceful protesters,” the US would strike Iran “very hard”.
Any country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America.
Donald Trump
Tehran is taking it seriously after Washington’s seizure of Venezuela’s Nicolás Maduro.
Between the lines
Despite appearances, the regime is not cornered - yet.
The appointment of hard-liner Ahmad Vahidi to a senior IRGC role signals readiness to escalate. Sources say the Guards declared a “yellow” emergency, stopping short of full mobilization but tightening control.
Crucially, senior bazaaris and regime-linked oligarchs remain on the sidelines. Wealthier merchants are insulated from daily currency swings and deeply embedded in patronage networks; they have far more to lose from chaos than from repression.
The opposition remains fragmented. Analysts quoted by Bloomberg and Reuters describe bitter splits between monarchists backing Reza Pahlavi and rival camps wary of any single “savior.”
As one political analyst put it: “Anger is abundant. Coordination is scarce.”
What's next
History suggests three broad paths - none guaranteed.
Economic shock absorber: Tehran could restore preferential exchange rates at a higher level, reopen rent channels and calm markets, relying on targeted arrests rather than mass bloodshed.
Escalation and repression: If protests expand into sustained strikes in transport, energy and public services, the regime may calculate that overwhelming force is worth the cost.
Slow unraveling: A prolonged stalemate - grinding poverty, intermittent unrest and tighter security - could hollow out the system without dramatic collapse.
For regime change to become real, several things would need to shift at once: elite defections, protesters holding territory, disciplined nationwide noncooperation, and - most critically - a credible vision of the “day after” that reassures fence-sitters and neighbors alike.
Iran’s proverb looms large: “Same donkey, different saddle.” Many Iranians don’t want a cosmetic swap at the top; they want a clean break from a corrupt machine.
The Islamic Republic is arguably weaker than it has ever been. But as decades of uprisings show, weakness does not automatically translate into collapse - especially when fear of chaos still rivals hope for change.
(With inputs from agencies)