Protests Erupt In Iran's Capital As Rial Drops To Record Low

Iran’s capital was hit by a wave of protests after the local currency slumped to a record low, pushing up food prices and deepening an economic crisis in the sanctions-hit nation. 

The state broadcaster aired blurred footage of what it described as limited protests by merchants in Tehran’s Grand Bazaar on Monday, though reports on social media suggested the demonstrations were on a larger scale and that shopkeepers had closed their stores. 

The unrest took place after the rial hit an historic low of 1.45 million against the dollar on the unregulated market on Sunday, before recovering somewhat to about 1.38 million per dollar as of Monday afternoon. That’s raised alarm bells that a potential nationwide crisis could be underway, like a series of earlier protests that have rocked the Islamic Republic in recent years.

Iranian state media reported that the government’s economic team held an urgent meeting to discuss “currency, trade, and public welfare policies.” Later on Monday, the state-run Islamic Republic News Agency reported that President Masoud Pezeshkian had accepted the resignation of Central Bank Governor Mohammad-Reza Farzin, appointing former Economy Minister Abdolnaser Hemmati as his replacement.

Although still limited in scope and intensity, the Tehran protests highlight the strain of soaring inflation and mounting living costs on millions of Iranians.

Sanctions weigh on Iran’s economy, curbing government revenues, particularly from oil exports. Israel’s June airstrikes targeting Iranian nuclear sites, assisted by the US President Donald Trump’s administration, ended months of negotiations between Tehran and Washington over a deal to limit Iran’s atomic activities in return for sanctions relief.

In response, Iran has sought new revenue streams, including raising heavily subsidized gasoline prices for the first time since 2019, a move that has triggered deadly protests in the past.

Last week, the government introduced its draft budget for the next Iranian fiscal year, targeting a 60% increase in tax revenues. It also proposes a 20% pay rise for government employees and pensioners, well below inflation rates exceeding 40%.

In Tehran’s Grand Bazaar, multiple videos appeared to show security forces using tear gas to disperse crowds. Bloomberg couldn’t independently verify the authenticity of the footage.