Iran interior ministry blames currency volatility on ‘psychological warfare’

Iranian state-linked media on Monday portrayed strikes by Tehran shopkeepers as part of a foreign-backed effort to destabilize the country, as protests over the collapsing rial and rising prices entered a second day.

Fars News Agency, which is affiliated with Iran’s Revolutionary Guards, quoted an unnamed official at the Intelligence Ministry as saying the protests followed a “security destabilization scenario” orchestrated by Iran’s adversaries.

“The pattern of small cells appearing in trade gatherings to steer them in a radical direction is exactly in line with the enemy’s security-destabilization scenario,” the official was quoted as saying. “The aim is to turn economic criticism into political instability.”

Fars said analysts linked to the outlet viewed the unrest reminder as part of a broader campaign that began with what it described as “maximum pressure” sanctions and has now entered a phase focused on undermining internal security.

“Economic pressure, then incitement to protest, and finally instability – this is the enemy’s strategic triangle against the Islamic Republic,” the agency said.

Security forces fired tear gas at protesting shopkeepers in Tehran’s Bagh-e Sepahsalar area on Monday, according to a video received by Iran International.

The incident occurred as merchants who had closed their shops gathered to protest worsening economic conditions and the rial’s sharp decline, with demonstrations continuing into a second day across parts of the capital.

Iran’s judiciary warned on Monday that it would pursue and punish individuals accused of disrupting the country’s economic system, as authorities face mounting pressure from a collapsing currency, high inflation and widening public unrest.

Judiciary chief Gholamhossein Mohseni Ejei said those whose actions increase pressure on people’s livelihoods – whether deliberately or not – would be warned and, if they persist, prosecuted, according to remarks carried by state media.

“Those who, knowingly or unknowingly, put added pressure on people and their livelihoods and effectively move in the direction of the enemy’s objectives must be cautioned,” Ejei said. “If they do not heed these warnings, they must be seriously pursued and punished by the relevant authorities.”

Ejei framed economic disruptions as part of what he described as coordinated “psychological and economic pressure” by Iran’s adversaries, saying judicial authorities must respond decisively.

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Judiciary chief Gholamhossein Mohseni Ejei said those whose actions increase pressure on people’s livelihoods – whether deliberately or not – would be warned and, if they persist, prosecuted, according to remarks carried by state media.

“Those who, knowingly or unknowingly, put added pressure on people and their livelihoods and effectively move in the direction of the enemy’s objectives must be cautioned,” Ejei said. “If they do not heed these warnings, they must be seriously pursued and punished by the relevant authorities.”

Ejei framed economic disruptions as part of what he described as coordinated “psychological and economic pressure” by Iran’s adversaries, saying judicial authorities must respond decisively.

He cited laws allowing harsh penalties for acts deemed to constitute “corruption on earth,” a charge that can carry the death penalty, including in cases of large-scale economic disruption.

He said penalties such as fines were insufficient in the current climate. “These fines are not deterrent,” Ejei said, calling for punishments proportionate to current conditions.

The judiciary chief also stressed that responsibility extended beyond traders to officials who enable economic violations. He warned that individuals inside government bodies who facilitate hoarding, smuggling or currency abuses would face prosecution.

Addressing currency volatility, Ejei said authorities must identify those responsible for market instability.

He cited figures from central bank officials indicating that around $18 billion in export revenues had not been returned to the country.

The warning comes amid sharp falls in the rial, accelerating inflation and protests by shopkeepers in Tehran over rising costs and economic mismanagement.

In a statement carried by state media, the judiciary’s media center said reports that a decision by the heads of Iran’s three branches of power had endorsed the continuation of Mohammad Reza Farzin as central bank governor were “not true.”

“No decision was taken in the meeting of the heads of powers regarding the retention of the central bank governor,” the statement said, adding that the matter falls within the authority of President Masoud Pezeshkian.

The denial follows two days of conflicting reports in Iranian media over whether Farzin had resigned, been dismissed, or would remain in office.

Some outlets reported that Farzin had submitted his resignation earlier in December and that a committee had begun reviewing candidates to replace him, while others said he had been kept on with the backing of senior political leaders.

Later on Monday, the president’s office confirmed that Farzin had submitted his resignation, but said it had not yet been approved by the president.

The judiciary’s clarification came as Iran grapples with a sharp deterioration in economic conditions, marked by a steep fall in the rial and accelerating inflation.

On Monday, the US dollar traded about 1.41 million rials on the open market, while gold prices also hit record highs, prompting protests and strikes by shopkeepers in parts of Tehran.

Farzin, who was appointed under former president Ebrahim Raisi and retained after Pezeshkian took office, has faced growing criticism from lawmakers over currency instability and the central bank’s handling of foreign exchange shortages.

Reports of tension between Farzin and members of parliament surfaced earlier this month during a closed-door session ahead of the government’s submission of its draft budget, with some media saying the governor offered no new solutions to curb currency volatility.

President Pezeshkian has acknowledged the strain caused by energy subsidies and foreign exchange pressures, but has said the government lacks the resources to shield households fully from inflation.