The Iranian rial's decline to worthless value has become the most obvious measure of a country being consumed by conflict. The hostilities between the United States, Israel, and Iran erupted in February 2026; the currency was already in a state of decay, having lost 60% of its value in the months following an early 12-day war. But the new war accelerated the collapse into an irreversible phase. By late February 2026, the rial was trading at an unprecedented 1.64 million to the U.S. dollar on world open market, and it subsequently changed further to around 1.32 million. The figure represents the complete evaporation of household savings and purchasing power for ordinary Iranian people.
This currency falls in the shadow of a broader economic disintegration that has left the country in a state of nearly total paralysis. The International Monetary Fund predicts that Iran's economy will shrink by 6.1% in 2026 while inflation reaches toward 68.9%, a level that make necessities unattainable for millions of residents. The price of food has been particularly significant, with bread and cereals’ price going up 140% and oils and fats soaring by an almost incomprehensible 219% through March 2026. Moreover, the closure of the Strait of Hormuz and a U.S. naval blockade have severed more than 90% of Iran's annual sea trade, cutting off the oil exports that had been the country's primary source of revenue and leaving store shelves empty and hospitals without critical supplies. In a desperate need to meet the demand for physical cash, Iranian banks have begun distributing a 10-million-rial note, the largest amount of cash in the country's history. This is a malignant cycle that signals the continuous inflation of the Rial.
The economic catastrophe also leads to a profound social crisis. After the rial decreased to 1.42 million to the dollar and food prices turned extremely high, merchants in Tehran closed their shops in protest, and the demonstrations quickly became a nationwide street protest, aiming for the collapse of the Islamic Republic. The government response was a method of inhumanitarian brutality: the security forces, such as the IRGC and police, used rifles, shotguns loaded with metal pellets, water cannon, and tear gas against protesters, and Human Rights Watch recorded the killing of at least 28 protesters, including children, in just a few days of January 2026. The Islamic Republic imposed an internet blackout on January 8, not only to block news of the violence from reaching the outside world but also to impact the businesses that had already been devastated by the currency fall. By mid-January, the U.S.-based Human Rights Activists News Agency had concluded 3,919 deaths and 24,669 arrests, while Iran's own Supreme Leader acknowledged that "several thousand" had been killed, leaving a state that is making its own population support themselves.
The rial's collapse did not only impoverish a nation, but also set a chain of social repression and violence that has covered the Iranian society with fear, poverty, and permanent crushing.
Source: https://apnews.com/article/iran-protests-us-israel-war-economy-d5da3b5f56449dd3871c9438c07f069f