The Rial’s Collapse: Tehran Paralyzed by Largest Protests Since 2022
Tehran, Iran – January 3, 2026
Supreme Leader Blames “Enemy Hands.”
In a dramatic and deadly start to the new year, the Islamic Republic of Iran is facing a domestic crisis of unprecedented proportions.
What began as a strike by bazaar merchants over the catastrophic devaluation of the Iranian rial has evolved into a nationwide uprising that has left at least eight people dead and dozens of government buildings charred.
As smoke rises over Tehran’s Grand Bazaar, Supreme Leader Ayatollah Ali Khamenei has broken his silence, acknowledging the “legitimate” economic pain of the people while simultaneously ordering a brutal crackdown on what he calls “mercenary agents of the enemy.”
A Currency in Free-fall
The spark for this latest wave of unrest was the record-breaking plunge of the rial, which hit a staggering 1.42 million to the U.S. dollar on Sunday.
This hyper-inflationary surge has effectively wiped out the savings of the middle class and made basic essentials—food, medicine, and fuel—unaffordable for the average citizen.
In response, the merchant class, historically a pillar of support for the Islamic system, shuttered their shops in Tehran’s Saadi Street and the Shush neighborhood, bringing the capital’s heart to a standstill.
The strikes quickly spread from the bazaars to the universities and then to the streets. By Tuesday, cities including Shiraz, Isfahan, and Kermanshah reported intense clashes.
In the southern city of Fasa, video footage captured the moment hundreds of protesters breached the gates of a government complex, setting fire to the governor’s office.
The response from the Basij militia and security forces has been swift and kinetic, with military helicopters seen hovering over residential districts in an attempt to intimidate the populace.
The Dual Narrative of Khamenei
During a high-profile meeting in Tehran on Saturday, Ayatollah Khamenei addressed the nation with a carefully calibrated message. In a rare concession, he admitted that the grievances of the shopkeepers were “valid,” stating that no merchant can do business in an environment of such instability.
However, this empathy was a prelude to a stern warning. He claimed that the “unnatural” speed of the currency collapse was the result of a coordinated sabotage effort by foreign intelligence services.
“Officials must have dialogue with protesters, but it is useless to have dialogue with rioters.
Those must be put in their place,” Khamenei declared. This distinction—between a “protester” with economic needs and a “rioter” with political goals—is seen by analysts as a green light for the judiciary and security apparatus to use lethal force against those calling for the end of clerical rule.
Regional Implications and the “US Interference” Warning
The timing of this internal turmoil is particularly sensitive given the recent U.S. military action in Venezuela.
Senior Iranian officials, including Ali Larijani, have taken to social media to warn the United States against “reckless interference” in Iranian internal matters, suggesting that any attempt by Washington to capitalize on the protests would result in a “comprehensive and decisive” response across the Middle East.
As the death toll rises and the Internet remains throttled in several provinces, the Iranian regime is facing its most significant test since the 2022 “Woman, Life, Freedom” movement.
With the economy in a tailspin and a leadership that views domestic dissent as a foreign invasion, the stage is set for a prolonged and potentially bloody confrontation.
Headlines from Tehran:
• Bazaar Blackout: Merchants lead the charge as the rial hits 1.42 million per dollar.
• Deadly Escalation: Eight confirmed dead in clashes across 25 Iranian cities.
• Khamenei’s Warning: Supreme Leader distinguishes between “valid protesters” and “enemy rioters.”
• Global Stance: Larijani warns of regional destabilization if the U.S. intervenes.
