Iran is currently facing a deep economic crisis alongside growing political unrest. In a major blow, the Iranian currency, the rial, has effectively lost its value in Europe, dropping to zero against the euro. As a result, the rial can no longer be exchanged across European countries, further isolating Iran from the global financial system. Inside the country, the situation has deteriorated sharply, with ordinary citizens struggling to afford even basic necessities.
This severe economic collapse has triggered widespread protests across Iran, where demonstrators are now openly demanding a change in governance.
The protests began on December 28, initially led by traders and business owners who took to the streets against the rapidly weakening economy, soaring inflation, and the sharp fall in the rial’s value. The currency’s decline has been dramatic: against the Indian rupee, the rial is now valued at just 0.000091 paise, while against the US dollar it has fallen to around 0.0000010 cents.
Most strikingly, the rial’s value against the euro has dropped to zero, meaning it is no longer accepted or exchangeable in any of the 27 European Union countries.
Has Iran Currency Collapsed?
While some reports claim the rial has “collapsed,” experts clarify that a currency never truly goes to zero while a country continues to operate. The situation reflects a severe loss of purchasing power, extreme depreciation, and potential redenomination. In October 2025, Iran’s parliament approved a plan to remove four zeros from the rial over a two-year preparation and three-year transition period, where old and new notes would circulate simultaneously.
Analysts say this move is a temporary “reset” to make the currency manageable on paper, but it does not solve the underlying economic challenges, such as inflation, weak growth, and limited access to foreign currency.
Iran Currency Collapse: Five Key Drivers Behind the Rial’s Freefall
- US and International Sanctions: Restricting access to dollars from exports, especially oil, has intensified pressure on the rial.
- Hyperinflation: Consumer prices rose by 42.5% in December 2025, forcing citizens to seek foreign currencies, gold, or essentials instead of holding cash.
- Weak Economic Growth: Iran’s GDP contracted by 1.7% in 2025, with further shrinkage projected in 2026, limiting government revenue and fiscal stability.
- Policy Changes: Recent reforms requiring importers to purchase foreign currency at open-market rates increased demand for dollars overnight.
- Political Unrest: Ongoing protests against clerical leadership and economic mismanagement have added a “risk premium,” accelerating currency depreciation.
Protests Spread as Citizens Bear the Brunt
More than 600 protests have erupted across all 31 provinces of Iran. Reports indicate at least 646 people have died, with over 10,700 detained. Citizens are marching against high inflation, rising food prices, and the collapse of the rial.
Trump administration officials and global observers are monitoring the situation closely. US President Donald Trump had previously threatened sanctions and tariffs on trade partners if Iran continues using force against protestors, further escalating international economic pressure.
Iran Currency: Bitcoin and Alternatives Gain Attention
As trust in the rial erodes, some Iranians are turning attention to Bitcoin and other cryptocurrencies. These digital currencies are not regulated by domestic banks and provide a potential hedge against rapid inflation. However, volatility, legal risks, and technological barriers remain significant hurdles for widespread adoption.
Iran Currency: Will the Rial Stabilize?
Experts suggest the rial may see short-term relief if redenomination proceeds smoothly or new policy measures stabilize currency supply. A fresh cycle of protests, continued sanctions, and political uncertainty, however, could keep the currency under severe pressure.
The Iranian economy remains at a crossroads, with citizens and policymakers alike searching for solutions amid one of the worst financial crises in the nation’s modern history.
