If gentle reader recalls, December 2025 and January 2026 were tumultuous months for Iran. Among the more important stories we happened to catch were:
December 15
Iran by Slavoj Žižek: "When Communism Is the Only Option"
And from the AP via the Times of Israel, December 15:
Iran’s rial currency plummets to new low, sparking fears of higher food prices
And January 16:
"The Obscure Bank Collapse That Sent Iran Into a Tailspin"
And the headline story from Iran International, March 25:
Iran’s economy is no longer merely experiencing high inflation; it is exhibiting the structural symptoms of a nation losing faith in its own currency and facing a shift in its monetary regime.
Over the past year, a pattern has emerged across markets, policy decisions and price behavior pointing to the early stages of de facto dollarization.
In April 2025, when a “five-dollar pizza” shop opened in Tehran’s affluent Niavaran neighborhood, many dismissed the fixed dollar price as a marketing gimmick. At the time, one pizza cost roughly 5 million rials, with inflation reportedly above 40%.
Less than a year later, on the eve of the current war, the same pizza was priced at 8.6 million rials, while officials acknowledged inflation exceeding 70%. What initially appeared symbolic began to look practical.
The shift was not confined to niche businesses and high-end stores. Informal dollar transactions, once largely limited to luxury goods or services aimed at foreign customers, steadily expanded.
In the months leading up to the 12-day war, despite the departure of many foreign nationals, dollar-pegged property sales and rentals increased noticeably. While upscale properties led the trend, mid-range apartments also entered the market with dollar-based pricing.
By the end of 2025, the US dollar had climbed to 1,430,000 rials, up from 800,000 in January of the same year. The volatility hit the automotive market hard. With car production concentrated among three major state-linked manufacturers and supply unable to meet demand, the price of second-hand cars in rial terms outpaced the increase in the dollar exchange rate.
Media headlines read, “The dollar is in the driver’s seat,” and traders increasingly priced vehicles in dollars. In December, automobile market expert Abdollah Babaei warned that if current trends continued, car transactions would effectively become dollarized.
Economists began warning of a structural shift. Former Tehran Stock Exchange chief Hossein Abdeh Tabrizi cautioned that Iran "will enter the stage of dollarization" if 60% inflation and government overspending continued.
[T]he statement went viral, and many echoed the growing concern that “Iran’s economy is on a dangerous path,” with the rial losing its function both as a store of value and as a unit of account....
....MUCH MORE
