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“Here I stand, broken by the burden of days.” SaysForough Farrokhzad.

In late December 2025, the Islamic Republic of Iran entered a period of acute political and economic instability driven by the rapid devaluation of its currency, record-high inflation, and intensifying public discontent. The Iranian rial reached historic lows against the United States dollar, trading at approximately 1.4 to 1.45 million rials per US$1 in open markets by late December, a sharp deterioration compared with figures earlier in the year. This collapse of the currency significantly eroded purchasing power and exacerbated the cost of food, fuel, and essential goods. 

Official data indicate that inflation in Iran exceeded 40 per cent in December 2025, with certain consumer categories such as food and health goods experiencing much steeper increases, including food prices rising by around 72 per cent year-on-year and health and medical item prices up approximately 50 per cent. These conditions compounded longstanding economic grievances linked to structural inefficiencies, fiscal mismanagement, and the cumulative impact of international sanctions that have constrained oil exports and access to global financial systems. 

The initial trigger for public mobilisation occurred on 28 December 2025, when merchants and shopkeepers in Tehran’s Grand Bazaar and other commercial districts closed their businesses in protest of the currency’s collapse and associated price instability. Within days, these protests evolved into broader demonstrations involving workers, students, and unemployed youth, spreading from Tehran to multiple provinces including Isfahan, Shiraz, Mashhad, Hamadan, and Qeshm. What had begun as expressions of economic hardship quickly incorporated political demands that challenged the state’s legitimacy and capacity to govern responsively.

The protests were distinguished by their cross-class composition and geographic breadth. Bazaar traders, historically cautious and economic actors who typically avoid overt political confrontation, participated in closures and marches, signalling that economic distress had crossed a critical threshold and undermined the regime’s economic legitimacy in the perceptions of key societal groups. The expansion of mobilisation into university campuses, industrial sectors, and urban neighbourhoods underscored the widespread nature of disillusionment with governance structures perceived as unresponsive to popular needs.

Official responses combined formal acknowledgement of economic hardship with measures that proved insufficient to restore confidence. Government actions included the appointment of a new central bank governor in an attempt to stabilise monetary conditions and statements by the president recognising the legitimacy of protesters’ economic demands. However, these concessions did not address deeper systemic problems such as the absence of meaningful political reform, entrenched decision-making within a closed political system, and persistent economic isolation.

Security forces were deployed to contain the unrest, resulting in confrontations that drew international attention. Reports from independent observers and rights groups suggested that several dozen people were killed in clashes during the early days of the protests and thousands were detained. The enforcement of internet restrictions and other communicative controls further limited public expression and documentation, contributing to an environment in which dissent was suppressed rather than engaged with substantively.

In the contest over narrative authority, many demonstrators explicitly rejected state explanations of unrest as foreign-inspired, instead attributing responsibility to domestic economic mismanagement and political exclusion. The popular perception that longstanding socio-economic grievances were being ignored contributed to the erosion of the regime’s legitimacy, as official rhetoric increasingly diverged from lived experience.

By the end of December, protests had subsided under state pressure but the underlying drivers of disaffection remained unresolved. The economy continued to exhibit profound fragility, long-standing sanctions impacts persisted, and political exclusionary practices limited avenues for institutional reform. The outlook for Iran’s governance therefore remained uncertain, with the potential for intensified authoritarian consolidation, selective economic concessions without structural reform, or recurrent cycles of unrest. The events of this period illustrated that the crisis was systemic and not merely episodic, with implications for the state’s capacity to generate sustained legitimacy through policy responsiveness.

Tohfatur Rabbi Piyal is a Research Assistant at CGS

Disclaimer: Views in this article are author’s own and do not necessarily reflect CGS policy