Iranian protesters chant for a 'revolution' after years of economic chaos
People walk past a display sign at a currency exchange bureau as the value of the Iranian rial drops. (Reuters: Majid Asgaripour/WANA, File photo)
In a small town near Rasht, the largest city on Iran's Caspian Sea coast, small business owner Ali is struggling to live.
Iran's economy is in ruins, and Ali (whose real name has been concealed to protect his safety) says putting food on the table has become a daily struggle.
"With the situation of the rial falling against the dollar, business has come to a standstill," he tells ABC News in Farsi during a rare moment when he gets internet connection.
"This is a revolution stemming from economic troubles."
Ali adds that rampant corruption has also led to the country's demise.
When Iran's Islamic regime ousted the Shah and took power in 1979, $A1 was worth around 70 Iranian rials.
Today $A1 buys about 700,000 rials.
It is a staggering illustration of the currency's collapse.
On December 28, Iran's currency plunged to an all-time low, unleashing an unprecedented wave of public anger as hundreds of market owners from Tehran's bazaar — a group that rarely joins mass protests — turned to the streets to demand economic relief.
Over the next fortnight, the demonstrations turned political and spread beyond the markets and across the country, as people rallied against the Islamic regime.
Iran's currency lost 84 per cent of its value in 2025 and the cost of food jumped 72 per cent.
People walk past closed shops following protests over a plunge in the currency's value, in the Tehran Grand Bazaar. (Majid Asgaripour/WANA via Reuters)
Ali says as peoples' finances have dwindled, many young people and bright minds have left his town.
There is, he says, no opportunities and no hope of a brighter future.
While economic discontent has been a factor in some previous protest movements in Iran, Ali says this time something far bigger is at play.
And it's why he joined the nationwide protests on January 8.
Loading..."Now someone goes to protest, gets beaten up, comes home, opens the fridge and there's nothing there to eat,"he said.
"I don't feel like this [the protests] will die down.
"The people of Iran have played their cards."
'A profound crisis of governance'
For more than two weeks, Iranians have lived in a near-total communications blackout and videos of the government's use of violent force against unarmed civilians, including protesters being shot in the face, continue to surface.
A report from doctors in Iran shared with media outlets, including the ABC, puts the death toll at least 16,500.
And as Mai Sato, special rapporteur on the situation of human rights in the Islamic Republic of Iran, told ABC News, the figures could rapidly rise.
US sanctions, the fall of Iran's regional allies, a 12-day war with Israel and America, and the collapse of Iran's largest bank are among factors that experts say have pushed Iran's economy into freefall.
Loading...But, as Iranians like Ali point out, economic mismanagement and entrenched corruption are at the centre of the country's sick economy.
"What we want from the world is that 90 million Iranians be rescued from this dictator regime that has stolen our money and is using it for themselves," he said.
"The mafia of the IRGC [Islamic Revolutionary Guard Corp] has taken control of everything."
Bank collapse exacerbated Iran's financial crisis
A key sign that Iran's economy had reached tipping point was when Iran's largest bank, Ayandeh Bank, collapsed in October.
Founded in 2013 by Ali Ansari, a wealthy Iranian businessman, and run by allies of the regime, Ayandeh was more than $A7.3 billion in debt, when it went bust.
It offered some of the highest interest rates in Iran, attracting millions of depositors.
To sustain those returns, it borrowed heavily from the central bank, which repeatedly printed money to keep the institution afloat, former deputy director of the IMF's Middle East department Adnan Mazarei told the ABC.
"The banking system in Iran is bankrupt,"he said.
"Iran's banks are in a very weak condition with large non-performing loans, considerable accumulated losses and in order to keep things going they offer high interest rates to depositors.
"But more important, they have access to central bank liquidity [emergency cash]."
Economists and officials had long warned that propping up Ayandeh by printing money from the central bank would drive up inflation.
A customer buys Iranian gold coins at a currency exchange office in Tehran's business district. (Reuters: Raheb Homavandi)
Its flagship investment was the Iran Mall, which opened in 2018 and is reportedly twice the size of the Pentagon, complete with swimming pools, car showrooms, cinemas, and sports complex.
In October, Iran's judiciary chief threatened legal action if bank authorities failed to act and the central bank announced Ayandeh's closure the very next day.
The central bank labelled the institution a "Ponzi scheme".
The government ultimately absorbed the bank's debts and forced it to merge with Iran's state-owned lender.
At least five other banks are reportedly facing a similar fate, raising fears the crisis is far from over.
Loading..."Eighty-five per cent of Iran's population are public employees and the government needs to pay their salaries," head of economy at the Centre for Middle East and Global Order, Dr Mahdi Ghodsi told the ABC.
"And when they become bankrupt it's the government that should take the role of paying for that.
"The way they do that is they go to the central bank and get some more debt, and the central bank prints more money, so it's a vicious cycle."
US sanctions, Iran-Israel 12-day war caused further strain
In addition to a failure of governance and economic mismanagement, Iran has faced years of US-led sanctions that some commentators say have put its economy under strain.
"Sanctions did two things: it lowered the level of oil revenue, and it led to restrictions on financial transactions," Mr Mazarei said.
"The circumvention of sanctions created new opportunities for corruption."
The 12-day war between Israel and Iran in June 2025 marked another turning point for Iran's economy.
The United States was directly involved in the conflict, launching air strikes on Iranian nuclear facilities.
"The June attack led to pressures on the exchange rate because as soon as they could, people wanted to get out of the rial into foreign currency," Mr Mazarei said.
"That led to a considerable lowering of purchasing power and an increase in poverty."
Over the past two years, some of Iran's key allies were also weakened, leaving the country economically vulnerable.
In late 2024, Syria's president Bashar al-Assad was overthrown, which was one of Iran's most important partners.
In 2025, Israeli attacks on Hezbollah in Lebanon took out many of the group's leadership, including its longtime head Hassan Nasrallah.
"All of these have led to a considerable loss of faith and hope inside the country," Mr Mazarei said.
Crowds cram into a Beirut stadium to attend the funeral of former Hezbollah leader Hassan Nasrallah. (ABC News: Cherine Yazbeck)
While Iran sits on some of the world's largest oil and gas reserves, international sanctions have limited its ability to sell.
So the regime has turned to selling to China at a discount, Mr Mazarei said.
"This is a very rich country that cannot use its resources because of a combination of sanctions, domestic mismanagement and a lack [of] technology,"he said.
The Islamic Revolutionary Guard controls vast swaths of the country's economy, profiting from airlines, shipping and oil companies.
But analysts say decades of mismanagement and corruption have widened wealth gaps and left ordinary Iranians struggling even as the state generates revenue from resources.
Back in that small town near Rasht, Ali sums it up this way:
"In Iran, people are without a good car, without a good life, without good clothing, without medication, a [proper] healthcare system, they can't travel, they don't have internet," he said.
"We just want to be rescued from this and live life like in other normal countries."