The Iranian currency, the rial, has plummeted, and the president admitted there is no money for salary increases. What happened? How can this be interpreted from an economic perspective?

Iran has an economic system characterized by an extreme structure, dominated by an Islamic-style state-planned market economy where internal economic efficiency is severely suppressed. It also features a weak government under the supervision of the Faqih, accompanied by a nominal dual political system, with even its economic control amounting to only a fraction of a percent.

Beneath the structural economic contradictions concealed for years under the guise of "resistance" lie ever-expanding national debt, a continuously depreciating currency, and the steady depletion of mineral resource assets, coupled with a secular society that is increasingly fragmented. Perhaps this time, we should not focus on Mossad's role in Iran's current economic crisis, nor should we merely blame Western sanctions for excluding what should have been one of the world's wealthiest nations from the global financial markets.

We should pay more attention to what Iranian residents have experienced over the years under the immense wealth distribution gap in Iran.

I. The Current Situation of the Iran Moon Crisis

On the official exchange rate, we see that the USD/Iranian Rial exchange rate has remained stable at 420,000 IRR: 1 USD. However, in the black market, the Rial to USD exchange rate has long fallen below 1.45 million to 1. This figure represents a depreciation of over 140% compared to the same period last year, marking the most severe decline in a decade, and this is the outcome of Iran's currency reform this year! On the official exchange rate, we see that the USD/Iranian Rial exchange rate has remained stable at 420,000 IRR: 1 USD. However, in the black market, the Rial to USD exchange rate has long fallen below 1.45 million to 1. This figure represents a depreciation of over 140% compared to the same period last year, marking the most severe decline in a decade, and this is the outcome of Iran's currency reform this year!

In fact, we can also see from Iran's official data that Iran's currency must be in a severe state. Iran's inflation rate in December this year has skyrocketed to 43.3%, food prices have surged by 72.3% year-on-year, and medical supply prices have increased by 50%! In fact, we can also see from Iran's official data that Iran's currency must be in a severe state. Iran's inflation rate in December this year has skyrocketed to 43.3%, food prices have surged by 72.3% year-on-year, and medical supply prices have increased by 50%!

For more than one-third of Iran's population who earn less than $8.3 per day, their daily staple bread is rapidly becoming a "luxury." Moreover, due to supply and demand price issues caused by currency devaluation, even the capital city of Tehran has frequently experienced daily two-hour power outages.For more than one-third of Iran's population who earn less than $8.3 per day, their daily staple bread is rapidly becoming a "luxury." Moreover, due to supply and demand price issues caused by currency devaluation, even the capital city of Tehran has frequently experienced daily two-hour power outages.

This extremely severe economic issue rapidly escalated into a socio-economic crisis. Vendors in Tehran's Grand Bazaar initiated a strike first, followed by student groups joining the protest. Subsequently, conflicts erupted in dozens of cities including Mashhad and Kermanshah. Then, the riot units of the Islamic Revolutionary Guard Corps quickly intervened, using weapons such as tear gas to forcibly disperse the crowds. This **led the protest activities to shift towards deeper development! This extremely severe economic issue rapidly escalated into a socio-economic crisis. Vendors in Tehran's Grand Bazaar initiated a strike first, followed by student groups joining the protest. Subsequently, conflicts erupted in dozens of cities including Mashhad and Kermanshah. Then, the riot units of the Islamic Revolutionary Guard Corps quickly intervened, using weapons such as tear gas to forcibly disperse the crowds. This **led the protest activities to shift towards deeper development!

The demands of the Iranian people have shifted from economic relief to deeper political aspirations. At Tehran's Haji Nasir University, students held high banners and chanted slogans such as "Students, be the voice of your people," "Against the hijab, against repression," "Freedom and equality," directly targeting the Iranian authorities' decades-long suppression of personal and political freedoms. The demands of the Iranian people have shifted from economic relief to deeper political aspirations. At Tehran's Haji Nasir University, students held high banners and chanted slogans such as "Students, be the voice of your people," "Against the hijab, against repression," "Freedom and equality," directly targeting the Iranian authorities' decades-long suppression of personal and political freedoms.

On Qeshm Island and in Zanjan, protesters even chanted radical slogans such as "Seyyed Ali (Khamenei) will be overthrown this year" and "May Reza Shah's soul be happy," with some also calling for the return of the exiled Iranian Crown Prince Reza Pahlavi from the United States. They even protested the current regime's policies supporting Hamas and Lebanon's Hezbollah, shouting "Not for Gaza, not for Lebanon, I will give my life for Iran". On Qeshm Island and in Zanjan, protesters even chanted radical slogans such as "Seyyed Ali (Khamenei) will be overthrown this year" and "May Reza Shah's soul be happy," with some also calling for the return of the exiled Iranian Crown Prince Reza Pahlavi from the United States. They even protested the current regime's policies supporting Hamas and Lebanon's Hezbollah, shouting "Not for Gaza, not for Lebanon, I will give my life for Iran".

From my perspective, this crisis is not a short-term fluctuation. The Iranian government no longer has the economic capacity to maintain stability. If the Islamic privileged class fails to distribute benefits to society, even without considering the pressure of external sanctions, the accumulated historical structural issues and policy missteps alone could trigger a further escalation of the crisis.

II. External Strangulation: Sanctions and Geopolitical Conflicts

Since the Islamic Revolution, the United States has consistently imposed sanctions on Iran, which has prevented its dependent economy from fully integrating into the global trade and economic system.

Particularly, in 2018, the Trump administration unilaterally withdrew from the Iran Nuclear Deal, severed the connection between Iranian banks and the SWIFT system, and froze its overseas assets. Among these, oil exports, which account for over 60% of Iran's fiscal revenue and serve as its "economic engine," bore the brunt of the impact. Particularly, in 2018, the Trump administration unilaterally withdrew from the Iran Nuclear Deal, severed the connection between Iranian banks and the SWIFT system, and froze its overseas assets. Among these, oil exports, which account for over 60% of Iran's fiscal revenue and serve as its "economic engine," bore the brunt of the impact.

Before the sanctions, Iran's daily crude oil production remained stable at over 4 million barrels. After 2018, it sharply declined to less than 3 million barrels per day. In 2025, influenced by increased demand from Eastern markets, its exports recovered to 3.9 million - 4.27 million barrels, but still did not return to pre-sanction levels. Before the sanctions, Iran's daily crude oil production remained stable at over 4 million barrels. After 2018, it sharply declined to less than 3 million barrels per day. In 2025, influenced by increased demand from Eastern markets, its exports recovered to 3.9 million - 4.27 million barrels, but still did not return to pre-sanction levels.

The sharp decline in oil revenue directly leads to the depletion of foreign exchange reserves, especially since Iran relies on imports for 40% of its food and medicine, creating a "vicious cycle" between foreign exchange shortages and the depreciation of the rial: for every 10% drop in the exchange rate, the price of imported goods rises by 12%, ultimately pushing inflation to a high of 43.3%, while also making Iran increasingly dependent on the "smuggling economy within the resistance economy," with most of this income ending up in the hands of the Islamic Revolutionary Guard Corps, leading to a sharp decrease in the Iranian government's revenue!The sharp decline in oil revenue directly leads to the depletion of foreign exchange reserves, especially since Iran relies on imports for 40% of its food and medicine, creating a "vicious cycle" between foreign exchange shortages and the depreciation of the rial: for every 10% drop in the exchange rate, the price of imported goods rises by 12%, ultimately pushing inflation to a high of 43.3%, while also making Iran increasingly dependent on the "smuggling economy within the resistance economy," with most of this income ending up in the hands of the Islamic Revolutionary Guard Corps, leading to a sharp decrease in the Iranian government's revenue!

Additionally, the geopolitical conflicts in 2025 further exacerbated Iran's economic crisis. In June, a 12-day war broke out between Iran and Israel, damaging critical infrastructure and causing direct economic losses exceeding tens of billions of dollars. However, as soon as the fighting ceased, the United States imposed additional sanctions, placing Iranian shipping and energy companies on the "blacklist." Furthermore, the geopolitical conflicts in 2025 further intensified Iran's economic crisis. In June, a 12-day war erupted between Iran and Israel, resulting in the destruction of key infrastructure and direct economic losses of over tens of billions of dollars. Yet, immediately after the conflict ended, the United States added sanctions, listing Iranian shipping and energy enterprises on the "blacklist."

In September, the United Nations passed the "snapback sanctions mechanism," reinstating restrictions on Iran's weapons transactions and ballistic missile programs, completely blocking its path to alleviating economic pressure through international cooperation. This escalating external pressure has trapped Iran in a vicious cycle of **"sanctions - foreign exchange shortage - depreciation - inflation," making it difficult to break free.In September, the United Nations passed the "snapback sanctions mechanism," reinstating restrictions on Iran's weapons transactions and ballistic missile programs, completely blocking its path to alleviating economic pressure through international cooperation. This escalating external pressure has trapped Iran in a vicious cycle of **"sanctions - foreign exchange shortage - depreciation - inflation," making it difficult to break free.

III. Historical Accumulated Malpractices and Policy Missteps: The Structural Trap Has Already Formed

Since the Islamic Revolution in 1979, Iran's economy has never been able to shake off its "oil dependence." Unfortunately, on top of this, Iran has added the soul of Khomeini and Khamenei's economics!Since the Islamic Revolution in 1979, Iran's economy has never been able to shake off its "oil dependence." Unfortunately, on top of this, Iran has added the soul of Khomeini and Khamenei's economics!

We see that during the Pahlavi dynasty, Iran attempted to become a world power through comprehensive Westernization reforms, but it overly relied on petrodollars to drive industrialization while neglecting agriculture and manufacturing. During Khomeini's era, the "Islamization" policies attributed economic problems to farmers leaving the land**, leading to the nationalization of numerous enterprises, resulting in a rigid planned economy system that squeezed the development space for private enterprises and stifled innovation**. In recent years, after Khamenei came to power, he implemented a "resistance economy" policy aimed at reducing external dependence, yet it has still failed to change the distorted structure where oil accounts for 16% of GDP and 60% of fiscal revenue. We see that during the Pahlavi dynasty, Iran attempted to become a world power through comprehensive Westernization reforms, but it overly relied on petrodollars to drive industrialization while neglecting agriculture and manufacturing. During Khomeini's era, the "Islamization" policies attributed economic problems to farmers leaving the land**, leading to the nationalization of numerous enterprises, resulting in a rigid planned economy system that squeezed the development space for private enterprises and stifled innovation**. In recent years, after Khamenei came to power, he implemented a "resistance economy" policy aimed at reducing external dependence, yet it has still failed to change the distorted structure where oil accounts for 16% of GDP and 60% of fiscal revenue.

Meanwhile, Iran's industrialization upgrade path has been locked in. Through product competition, it has discovered that it neither has a market internationally nor can it achieve technological breakthroughs. Therefore, it frequently supports proxy forces, but last year this network suffered a severe blow, and Iran lost its control over its highly valuable market share.!Meanwhile, Iran's industrialization upgrade path has been locked in. Through product competition, it has discovered that it neither has a market internationally nor can it achieve technological breakthroughs. Therefore, it frequently supports proxy forces, but last year this network suffered a severe blow, and Iran lost its control over its highly valuable market share.!

And its domestic demand has already collapsed. According to data from the Iranian National Statistical Center, in 2025, 50% of men aged 25-40 were unemployed and not seeking work. The Iranian Ministry of Social Welfare further disclosed that 57% of the population suffers from varying degrees of malnutrition, and the poverty rate has surged to 27%-50%, nearly doubling compared to 2022. And its domestic demand has already collapsed. According to data from the Iranian National Statistical Center, in 2025, 50% of men aged 25-40 were unemployed and not seeking work. The Iranian Ministry of Social Welfare further disclosed that 57% of the population suffers from varying degrees of malnutrition, and the poverty rate has surged to 27%-50%, nearly doubling compared to 2022.

On this basis, Iran's state-owned enterprises are inefficient but monopolize resources through policy preferences, while private enterprises want to do well but lack funds and resources. Consequently, to survive, Iran has also developed a globally notorious underground banking market. Under the dual exchange rate system, the gap between Iran's official exchange rate and the black market rate is vast, creating arbitrage opportunities that foster speculation. The central bank's efforts to stabilize the currency by selling foreign exchange have repeatedly failed, rendering monetary tools ineffective.On this basis, Iran's state-owned enterprises are inefficient but monopolize resources through policy preferences, while private enterprises want to do well but lack funds and resources. Consequently, to survive, Iran has also developed a globally notorious underground banking market. Under the dual exchange rate system, the gap between Iran's official exchange rate and the black market rate is vast, creating arbitrage opportunities that foster speculation. The central bank's efforts to stabilize the currency by selling foreign exchange have repeatedly failed, rendering monetary tools ineffective.

Facing the crisis, the Iranian government's response not only failed to stop the bleeding but further accelerated the collapse of public confidence. Firstly, to fill the fiscal deficit, the Central Bank of Iran has long relied on "printing money to get by": In 2020, the year-on-year increase in the broad money supply reached 31.3%. When Farzin became the central bank governor in 2022, the rial exchange rate was still 430,000 rials per US dollar. By December 2025, the black market exchange rate had depreciated by more than three times. The negative consequences of excessive money issuance are ultimately borne by ordinary citizens. The minimum wage increase at the beginning of 2025 was far lower than the 43.3% inflation rate, reducing real purchasing power by nearly half. Meanwhile, the dollar assets of entities like the Islamic Revolutionary Guard Corps have appreciated significantly domestically! Facing the crisis, the Iranian government's response not only failed to stop the bleeding but further accelerated the collapse of public confidence. Firstly, to fill the fiscal deficit, the Central Bank of Iran has long relied on "printing money to get by": In 2020, the year-on-year increase in the broad money supply reached 31.3%. When Farzin became the central bank governor in 2022, the rial exchange rate was still 430,000 rials per US dollar. By December 2025, the black market exchange rate had depreciated by more than three times. The negative consequences of excessive money issuance are ultimately borne by ordinary citizens. The minimum wage increase at the beginning of 2025 was far lower than the 43.3% inflation rate, reducing real purchasing power by nearly half. Meanwhile, the dollar assets of entities like the Islamic Revolutionary Guard Corps have appreciated significantly domestically!

What's even more chaotic is the inconsistency of reform policies. At the end of 2024, the government proposed changing the currency name to "Toman" and removing four zeros, attempting to mask devaluation through "digital adjustment." Then, in August 2025, it suddenly reversed course, keeping the name "Rial" and only removing zeros from the face value. This kind of "superficial reform," lacking supporting measures, sent a signal of "loss of control in the monetary system" to the market, prompting people to rush to buy dollars and gold as a hedge, further accelerating the collapse of the Rial. What's even more chaotic is the inconsistency of reform policies. At the end of 2024, the government proposed changing the currency name to "Toman" and removing four zeros, attempting to mask devaluation through "digital adjustment." Then, in August 2025, it suddenly reversed course, keeping the name "Rial" and only removing zeros from the face value. This kind of "superficial reform," lacking supporting measures, sent a signal of "loss of control in the monetary system" to the market, prompting people to rush to buy dollars and gold as a hedge, further accelerating the collapse of the Rial.

In December 2025, Iran, as a world-class oil-producing country, introduced a three-tier gasoline pricing mechanism based on "the more you use, the more you pay," marking the first major adjustment to oil prices since 2019. However, this move once again increased Iran's logistics costs, turning the already severe inflation into deeper stagflation. Nevertheless, Iran's oil resources are largely controlled by a few major families and the Islamic Revolutionary Guard Corps. In December 2025, Iran, as a world-class oil-producing country, introduced a three-tier gasoline pricing mechanism based on "the more you use, the more you pay," marking the first major adjustment to oil prices since 2019. However, this move once again increased Iran's logistics costs, turning the already severe inflation into deeper stagflation. Nevertheless, Iran's oil resources are largely controlled by a few major families and the Islamic Revolutionary Guard Corps.