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While the streets are full of people, their pockets are empty. The Iranian rial has become a liability that citizens are desperate to offload.
On the surface, the streets of Tehran appear to have returned to normal.
Cafés are open, and traffic jams in the capital have resumed their usual pace. However, beneath this routine lies a nation on the brink of financial collapse, one that even the most brutal crackdowns may not contain.
While the streets are full of people, their pockets are empty. The Iranian rial has become a liability that citizens are desperate to offload.
“There is simply crazy inflation in the market because nobody wants to hold the Iranian currency,” explains Prof. Amos Nadan, head of the Dayan Center at Tel Aviv University, adding, “This currency is fundamentally unstable.”
Even before the recent military escalations, Iran was grappling with an inflation rate of approximately 70% – the highest since World War II.
Today, the numbers tell the story of a struggling middle class. The new monthly minimum wage stands at over 160 million rials, a figure that sounds astronomical until it is converted to its actual value: just over $100.
The human cost of this devaluation is staggering
“The truth is that this might not be the end. Because when there isn’t much economic activity in Iran – as there wasn’t during the war – there isn’t much opportunity for the currency to weaken dramatically,” says Eyal Hashkes, a strategic consultant and author of The Swords of the Economy.“The moment life returns to full normality, we will see an even more significant weakening of the rial.”
The human cost of this devaluation is staggering. Daily necessities have become luxury items. A single kebab in a restaurant now costs between five and six million rials, while a basic meal of chicken and rice can cost up to four million.
“We are seeing very difficult cases across many fields – child prostitution and other extremes just to bring food home,” notes Prof. Nadan.
“This is a population that is suffering, especially the poor, in a very severe way.”
Iran’s economic woes were not caused by the war; they were merely accelerated by it. Long before the first shots were fired, the country suffered from a chronic energy crisis, forced rolling blackouts, and a persistent drought that dried up the nation’s reservoirs.
These problems led to massive riots in January, which the regime suppressed with lethal force, resulting in the deaths of tens of thousands of protesters.
In an attempt to stifle dissent, the regime has kept the internet largely paralyzed. This digital blackout has cost the economy an estimated $37 million per day due to the inability to process online payments and disruptions to export chains.
According to Hashkes, the only way for Iran to emerge from this stagnation is to remove economic sanctions. Without external investment, Iran cannot grow. “Without removing sanctions, it will be impossible to regrow the economy.”
To further destabilize the regime’s ability to fund its military proxies, Israel targeted key industrial sites during the conflict, focusing on steel and petrochemical plants. While the strikes were defined as attacks on the military industry, the collateral damage to the civilian economy was immense.
“The attacks on steel facilities and other industries like petrochemicals led to a decrease of billions, or even tens of billions, in potential annual revenue for Iran,” says Hashkes.
