Iran health officials flag price rises as shortages loom over currency crunch

Nazemi was detained during a memorial service in the northeastern city of Mashhad for Khosrow Alikordi, a former political prisoner and lawyer for dissidents whose sudden death left supporters suspicious of state involvement, which Tehran denies.

At the ceremony, security forces used force to dispersed mourners and arrested 39 people, including activists, lawyers and civil society figures.

Nazemi’s sister Mahshid told Iran International she was on a live video call with Pouran when security forces stormed the mosque where the commemoration was being held.

“The security officers opened the mosque’s doors and attacked the people with batons and knives,” Mahshid said. “They threw tear gas inside the mosque," Mahshid said.

Mahshid was able to record portions of the incident by capturing the live video call with her sister, though she was unable to document the alleged knife and baton attacks she described.

She did, however, provide photos showing what appear to be knife wounds and a bloodied scene.

Videos reviewed by Iran International show Pouran describing the crackdown in real time before the feed was abruptly cut. Screams and loud bangs were audible.

Mahshid said she watched plainclothes officers beat women inside the mosque and drag people away. “They attacked them very badly. We could only hear screaming and see the camera shaking,” she said.

Iran International was not immediately able to verify all aspects of her account of the raid.

Defiance, fear of death

“It was terrifying,” Mahshid said. “But I also felt proud because I saw a group of brave women, without the hijab, in a mosque, in a religious city, shouting ‘Death to the dictator’ and ‘Woman, Life, Freedom."

The Woman, Life, Freedom movement marked one of the most serious challenges the Islamic Republic has faced, with protests erupting nationwide in 2022 after the death of Mahsa Amini in morality police custody and calling for an end to clerical rule.

Nazemi's sister says they still do not know where she is being held or which security body is responsible for her detention, though they fear the case may be under the authority of the Islamic Revolutionary Guard Corps.

“We don’t know which prison she is in or which organization is holding her,” Mahshid said. “And when there is no official information, the risk of torture and fabricated charges increases,” she added.

The family is also concerned about Nazemi’s health. She has a history of stomach cancer, severe respiratory problems and life-threatening anaphylactic reactions caused by medical negligence during a previous detention, according to her sister.

During an earlier imprisonment, Nazemi suffered allergic shock after being given an antibiotic she was known to be sensitive to while undergoing surgery, Mahshid said.

“Since then, her condition has never been stable. Now I don’t know if she is receiving any medication at all,” she told Iran International.

There is also an open case against Nazemi in the southeastern city of Kerman, which her family fears could be used to impose harsher charges.

“They have already given her 14 years in prison in one case,” Mahshid said. “They don’t answer us, they don’t give court documents, and they argue with our lawyers,” she told Iran International.

From memorial to mass arrests

Iranian authorities say 39 people were arrested during the memorial ceremony. Those detained included Alikordi’s brother Javad Alikordi, Mohammadi and human rights activists Aliyeh Motallebzadeh, Sepideh Gholian, and Hasti Amiri.

Several detainees have since made brief phone calls to their families, but relatives say information about their condition and whereabouts remains limited.

In a message relayed by her family, Mohammadi said she was severely beaten during her arrest, suffering repeated blows to the head and neck with batons, and was later accused of “cooperation with the State of Israel.”

Human rights groups say the arrests followed a violent crackdown on mourners at the memorial, which had become a flashpoint amid growing controversy over Alikordi’s death.

Alikordi, a lawyer known for defending political prisoners and bereaved families, was found dead in his office in Mashhad on December 5. Authorities say he died of a heart attack, but his family and colleagues have questioned the official account, citing the removal of surveillance cameras and inconsistencies in the investigation.

Calling on the international community to act, Mahshid urged governments and rights groups to demand accountability.

“When names and locations are hidden, people are tortured and silenced,” she said. “Be a voice. Raise the cost for the Islamic Republic and demand transparency — for my sister and for the suspicious death of Khosrow Alikordi,” she told Iran International.

“There should be an independent, impartial and transparent investigation into his death,” Tatyana Eatwell, an international human rights barrister at Doughty Street Chambers in London told Eye for Iran.

Eatwell has worked extensively on Iran-related cases including the detention of Nazanin Zaghari-Ratcliffe, a British-Iranian woman who was detained in Iran for six years on widely disputed charges while visiting family.

She later became one of the most high-profile cases of Iran’s detention of dual nationals, in a policy critics of Tehran have blasted as hostage diplomacy.

Alikordi’s body was discovered in his office in Mashhad on December 8, 2025.

Iranian authorities attributed his death to a cardiac arrest, citing alleged forensic evidence, even as unconfirmed reports emerged of head injuries, blood at the scene and the removal of security cameras.

Eatwell said the circumstances surrounding Alikordi’s death cannot be separated from the years of persecution he faced at the hands of Iranian authorities. He was a former political prisoner and had represented many dissidents throughout his career.

“Mr. Ali Kordi was imprisoned, he was disbarred from practice, subject to travel bans, simply for doing his job, for representing his clients without fear nor favor. This is part of our professional obligation," Eatwell told Eye for Iran.

“The first question one asks is whether in the light of allegations of state involvement, the state institutions themselves are sufficiently robust and independent to provide the family with the answers to the questions that they must have,” she said.

Alikordi was a prominent figure among Iran’s community of human rights defenders. He represented political dissidents, bereaved families and people arrested during the Women, Life, Freedom protests in 2002, including Fatemeh Sepehri, a well-known Iranian political activist and outspoken critic of Supreme Leader Ali Khamenei who has been repeatedly imprisoned for her opposition to the Islamic Republic.

A group of 81 lawyers inside Iran issued a public statement on December 9 demanding full transparency regarding the circumstances of Alikordi’s death and pledging support for his family in what they described as a necessary truth-seeking process, according to the Center for Human Rights in Iran.

Provincial officials in Razavi Khorasan in Northeastern Iran insist his death was natural, even as reports indicated a heavy security presence around the scene.

One of the lawyers who signed the statement told the Center for Human Rights in Iran that a key aim was to create a safe environment for Alikordi’s family.

A source familiar with the situation in the eastern, holy city of Mashhad said security agents warned civil and political activists arriving in the city not to give speeches at Alikordi’s funeral.

Following Alikordi’s burial, his brother, lawyer and academic Javad Alikordi said he had been summoned by the Mashhad Revolutionary Court.

Protests erupted on December 11 at Alikordi's memorial marking the seventh day since his death.

53-year-old 2023 Nobel Peace Prize Laureate Narges Mohammadi and at least 39 other people, according to local authorities, were arrested and remain in custody.

Eatwell said Alikordi’s persistence in continuing to practice law despite sustained pressure stood out, saying that lawyers who defend dissidents and protesters operate in an increasingly hostile environment.

“The impact that it’s designed to have is to discourage other lawyers from practicing in this way, to discourage people from speaking out, to discourage people from asking questions,” she said.

Eatwell said Iran’s repeated failures to conduct credible investigations make it unlikely that Alikordi’s family will receive answers through domestic channels alone.

She said the international community must be prepared to act, pointing to the United Nations Human Rights Council’s International Fact-Finding Mission on Iran, established in 2022 to investigate serious human rights violations.

Former Central Bank of Iran governor Mohammad-Hossein Adeli summed up the core dilemma in an editorial for Donya-ye-Eghtesad last week.

“The gap between subsidized and free-market exchange rates produces severe distortions, instability, and unjust rents—while simultaneously serving certain political and distributive goals,” he wrote.

Iran’s “preferential” currency system began in April 2018 under President Hassan Rouhani, when the exchange rate was fixed at 42,000 rials per dollar.

The rial plumbed new record lows of over 1.31 million to the dollar on Monday.

Designed to curb price shocks, protect low-income households, and guarantee access to essential goods and medicine, the subsidy was funded through oil and petroleum revenues.

But as the gap between the official and free-market rates continued to widen—and maintaining the system strained the budget—the administration of Ebrahim Raisi scrapped it as part of its so-called “economic surgery.”

Officials defended the move by pointing to massive arbitrage opportunities, rent-seeking among importers of essential goods, waste of foreign-exchange reserves, and the failure of subsidies to reach consumers.

The system, they argued, had become a costly burden on the state.

The “economic surgery” triggered Iran’s highest annual inflation since World War II and sparked widespread protests.

After several months, the government reintroduced subsidized foreign exchange at 285,000 rials—about half the free-market rate at the time.

The subsidized currency initially covered 25 categories of goods, though several items were later removed from the list.

In recent months, the government has also eliminated preferential currency from the import chain for several key commodities such as rice, vegetable oil, red meat, animal feed and medicine.

The state provided importers with roughly $18 billion at the 285,000-rial rate in 2023 and about $15 billion in 2024, and allocations are expected to fall to around $12 billion this year.

An economy distorted

Supporters of the multi-rate structure contend that it keeps essential goods and industrial inputs affordable, curbs inflation, and preserves some purchasing power.

Critics argue that while cheap currency slowed price increases temporarily at first, the widening gap with the market rate ultimately entrenched systematic corruption and prevented subsidies from reaching consumers.

Adeli, the former Central Bank governor, wrote that keeping prices artificially low through “subsidized, rent-laden exchange rates has only marginally contained prices while generating huge rents for importers who gain access to cheap currency.”

“Allocating subsidized currency in the name of supporting the final consumer ends up serving special-interest groups, diverting resources, and fueling informal markets.” Importers, he warned, often manipulate invoices to amplify profits.

Still too risky to end?

One of the starkest illustrations of the system’s failure was the Debsh Tea corruption scandal. Between 2019 and 2022, the company received an estimated $3.4–$3.7 billion in subsidized foreign currency.

Large portions were never used to import high-quality tea. Instead, part of the allocation was sold on the open market for profit, while some was used to import low-quality tea, later repackaged and marketed as premium.

The scandal became emblematic of how subsidized currency rewarded manipulation over genuine import needs, further eroding public trust.

Despite the failures, Adeli argued that Iran is not prepared for a unified exchange rate. Geopolitical tensions, intensifying sanctions, weak economic growth, the risk of inflation rising above 50%, and the possibility of a budget deficit exceeding 50% together create a fragile environment.

He therefore advises maintaining a cautious two-tier system, with essential goods and medicines supplied at a controlled rate.

Former economy Minister Ehsan Khandoozi has similarly echoed this caution, warning that abrupt unification could ignite fresh inflation and insisting on a gradual approach.

Economist Morteza Afghah told ILNA that some advocates of free-market policies act “as if they do not realize that we are in an extremely critical situation, and we cannot apply formulas designed for advanced economies under normal conditions to Iran’s current crisis.”

The dollar later eased slightly but continued to trade with wide volatility around 1.31 million rials. The euro was traded at about 1.54 million rials and the pound sterling at roughly 1.750 million rials.

The rial’s decline surpassed a previous record of 1.28 million rials per US dollar on Saturday, as Iran introduced a three-tier gasoline pricing system, including sales at 50,000 rials per liter which took effect nationwide in the early hours of the day.

It also surpassed an earlier record of 1.17 million rials per US dollar on September 30, after European countries moved to reimpose UN sanctions on Iran over its disputed nuclear program, tightening external constraints on the Iranian economy.

The latest slide comes amid soaring inflation, renewed volatility in Iran’s unofficial markets and continued uncertainty over stalled nuclear talks with the United States.

The rial, which traded at about 140,000 per US dollar in 2018, has lost just over eight times its value since Donald Trump restored US sanctions on Iran during his first term.

US talks with Tehran over its disputed nuclear program began earlier this year with a 60-day ultimatum. On the 61st day, June 13, Israel launched a surprise military campaign which was capped with US strikes on June 22 targeting key nuclear sites in Esfahan, Natanz and Fordow.

Iran denies seeking nuclear weapons and has called the attacks illegal.

The United States has demanded Iran renounce domestic uranium enrichment while Tehran maintains its nuclear program is an international right.

Ahmad Alamolhoda, the Supreme Leader’s representative in Razavi Khorasan province and Friday prayer leader in Mashhad, said the city’s identity was rooted in pilgrimage to the shrine of Imam Reza, one of Shi’ite Islam’s holiest sites.

“Mashhad is not a city for tourists; it is a city for pilgrims,” he was quoted as saying by Iranian media.

He cited comments attributed to some Arab visitors from Iraq who he said had indicated they might travel to Tehran and then head to the Caspian coast for leisure, which he said showed Mashhad’s role as a pilgrimage destination and the need to distinguish between religious tourism and recreational or historical tourism in other cities such as Isfahan or Shiraz.

Alamolhoda also addressed women’s attendance at sports stadiums, saying he had no religious objection in principle but favored designated seating areas for women separate from men to prevent behavior he said could lead to social “abnormalities.”

On the enforcement of Islamic dress codes, he cautioned against confrontational approaches toward women not wearing the hijab. Instead, he urged a compassionate approach, likening it to caring for an ill loved one, saying: “This is not good for you; don’t do it.”