Three-minute read
As Iran’s economy marks the final week of 2025, the foreign exchange market reflects the severity of the regime’s chronic financial crisis. The free-market exchange rate of the U.S. dollar has reached 93,850 tomans, an increase of 560 tomans in just 24 hours, while the official trading rate stands at 72,053 tomans and commercial transfers at 69,954 tomans. This widening gap is not a temporary fluctuation but a symptom of the deep structural currency crisis that has plagued Iran for decades.
At the root of this crisis lies the multi-rate exchange system, a mechanism that has allowed regime-linked networks to siphon national resources under the guise of managing the economy. Far from stabilizing markets, these policies have created layers of corruption, arbitrage opportunities, and rent-seeking for insiders loyal to the ruling elite.
Structural Weaknesses and Missed Opportunities
Iran’s economy has been severely weakened by international sanctions, political risks, energy imbalance, water scarcity, and environmental crises. Military tensions have further increased uncertainty, stalling investment and production. Despite a twenty-year national development plan that once promised Iran the leading economic position in West Asia, the country has fallen dramatically behind.
Technical fixes have repeatedly failed because non-economic factors—political repression, corruption, and lack of institutional independence—dominate economic decision-making. Without addressing these systemic barriers, no reform can take root.
#Iran's Currency and Gold Prices Surge Amid Escalating Tensions with the Westhttps://t.co/0REyGIQsCt
— NCRI-FAC (@iran_policy) February 9, 2025
The Populist Trap and Currency Controls
Ali Madanizadeh, the regime’s current Minister of Economy, has warned against the consequences of the regime’s own failed economic policies, not out of concern for reforms but out of fear that worsening distortions could fuel social backlash. He acknowledged that successive governments, rather than addressing structural weaknesses, have relied on artificial exchange mechanisms such as NIMA, SANA, and multiple exchange boards — policies that have deepened economic instability. Madanizadeh cautioned that under current conditions, even more fragmented exchange rate tiers could emerge, a scenario the regime fears could intensify public anger in an already explosive society.
The so-called Anti-Smuggling Law and related Central Bank directives, rather than resolving problems, have entrenched arbitrary rules and fueled further rent-seeking.
A History of Multi-Rate Failures
Iran’s currency history tells a story of repeated crisis and manipulation:
- 1991–1992: A brief period of single-rate policy.
- 1993: Dual exchange rates introduced, with the official rate diverging sharply from the free market.
- 2002–2010: Relative stability under single-rate system due to high oil revenues.
- 2011–2013: Sanctions reintroduced dual and even triple exchange rates.
- 2017–2021: The 42,000-rial “preferential” rate, ostensibly introduced to protect essential imports, became a symbol of corruption and inefficiency.
- 2022 onward: The establishment of the Currency Exchange Center entrenched three-tiered rates, with wide gaps between official, commercial, and free-market prices.
Today, the commercial rate hovers around 67,000–69,000 tomans, while the free-market rate exceeds 93,000 tomans. These distortions effectively sideline genuine market forces and create vast opportunities for insider profiteering.
#Iran Regime Parliament’s Think Tank: Forex Subsidy Policy Impractical
The Majlis Research Center, Iran Regime parliament’s research arm, has taken a dim view of the preferential forex rate policy of the government in the past months and warned about… pic.twitter.com/WoFNNjD5GP— NCRI-FAC (@iran_policy) January 2, 2019
The Central Bank in Chains
The Central Bank of Iran, whose role should be to stabilize currency and manage liquidity, has long been stripped of independence. Successive governments have used it as a tool to finance budget deficits, worsening inflation and undermining credibility.
Former Deputy Governor of the Central Bank, Kamal Seyed Ali, has confirmed that constant government intervention has drained foreign reserves, widened social inequality, and entrenched economic rents. The result is a 45-year cycle of double-digit inflation, often spiking above 40%, and continuous exchange-rate crises.
Each major currency shock—1994, 2011, 2018—has been triggered by a combination of external pressure (sanctions, oil shocks, geopolitical tensions) and internal mismanagement (rentier policies, forced exchange rates, negative interest rates). Instead of stabilizing markets, the regime’s interventions have merely postponed the inevitable collapse, leaving the population to pay the price through inflation, declining purchasing power, and capital flight.
#Iran’s Economic Crisis Isn’t a Mystery—It’s the Regime’s Legacyhttps://t.co/yTq2D6gXgt
— NCRI-FAC (@iran_policy) April 21, 2025
A System Designed for Plunder
Iran’s multi-rate exchange policy has been less about economic management and more about institutionalized looting by regime insiders. With the Central Bank reduced to a government puppet and rent-seeking entrenched in every tier of the exchange system, the cycle of crisis continues.
For the Iranian people, the reality is clear: an economy trapped in crisis, manipulated for the survival of a corrupt regime.