Protests erupt in Iran over currency's plunge to record low

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TEHRAN, Iran (AP) — Iran's largest protests in three years erupted Monday after the country’s currency plummeted to a record low against the U.S. dollar, and the head of the Central Bank resigned.

State TV reported the resignation of Mohammad Reza Farzin, while traders and shopkeepers rallied in Saadi Street in downtown Tehran as well as in the Shush neighborhood near Tehran's main Grand Bazaar. Merchants at the market played a crucial role in the 1979 Islamic Revolution that ousted the monarchy and brought Islamists to power.

The official IRNA news agency confirmed the protests. Witnesses reported similar rallies in other major cities including Isfahan in central Iran, Shiraz in the south and Mashhad in the northeast. In some places in Tehran, police fired tear gas to disperse protesters.

Monday's protests were the biggest since 2022, when the death of 22-year-old Mahsa Jina Amini in police custody triggered nationwide demonstrations. She was arrested by the country’s morality police for allegedly not wearing her hijab properly.

Witnesses told The Associated Press that traders shut their shops Monday and asked others to do the same. The semiofficial ILNA news agency said many businesses stopped trading even though some kept their shops open.

On Sunday, protests were limited to two major mobile markets in downtown Tehran, where the demonstrators chanted anti-government slogans.

Iran's rial on Sunday plunged to 1.42 million to the dollar. On Monday, it traded at 1.38 million to the dollar.

Reports about Farzin's possible resignation had been circulating over the past week. When he took office in 2022, the rial was trading at around 430,000 to the dollar.

The rapid depreciation is compounding inflationary pressure, pushing up prices of food and other daily necessities and further straining household budgets, a trend that could worsen with a gasoline price change introduced in recent days.

According to the state statistics center, the inflation rate in December rose to 42.2% from the same period last year and is 1.8% higher than in November. Food prices rose 72% and health and medical items were up 50% from December last year, according to the statistics center. Many critics see the rate as a sign of approaching hyperinflation.

Reports in official Iranian media that the government plans to increase taxes in the Iranian new year that begins March 21 have caused more concern.

Iran’s currency was trading at 32,000 rials to the dollar at the time of the 2015 nuclear accord that lifted international sanctions in exchange for tight controls on the country's nuclear program. That deal unraveled after U.S. President Donald Trump unilaterally withdrew the United States in 2018.

There is also uncertainty over the risk of renewed conflict following June’s 12-day war involving Iran and Israel. Many Iranians also fear the possibility of a broader confrontation that could draw in the United States, adding to market anxiety.

In September, the United Nations reimposed nuclear-related sanctions on Iran through what diplomats described as the “snapback” mechanism. Those measures once again froze Iranian assets abroad, halted arms transactions with Tehran and imposed penalties tied to Iran’s ballistic missile program.