Ayandeh Bank Collapse Triggers Hyperinflation and Protests in Iran

The collapse of Ayandeh Bank late last year has triggered a systemic economic crisis in Iran, with the institution incurring nearly $5 billion in losses from bad loans. To cover these debts, the Government of Iran printed money and merged the dissolved bank into the state-owned Bank Melli. This action, combined with tightening U.S. sanctions and the aftermath of a 12-day war with Israel and the United States in June, caused a severe currency crash.

The Iranian rial plummeted initially to over 1.1 million per dollar and later fell to between 1.4 million and 1.6 million per dollar in open markets. This devaluation fueled hyperinflation, with annual rates remaining above 40%, making essential imports of food and medicine unaffordable. These conditions sparked nationwide protests, including demonstrations by merchants in Tehran.

President Masoud Pezeshkian has attempted to mitigate the unrest through monthly cash subsidies, while the state responded to the protests with a deadly security crackdown that killed more than 2,400 people over a fortnight. The government has acknowledged the economic challenges and stated it is considering measures to stabilize the economy, though the nation remains precarious due to its heavy reliance on oil revenues.