Iranian President Masoud Pezeshkian said on Thursday that his government would stop distributing a heavily subsidized exchange rate, blaming the system for encouraging rent-seeking and failing to protect households despite billions of dollars in state support.
Speaking at a meeting with political and social activists in Chaharmahal and Bakhtiari province, Pezeshkian said the 28,500-toman dollar – one of several preferential exchange rates used in Iran – would no longer be allocated.
“Anyone who received the 28,500-toman dollar pocketed it, so we will not give it out anymore,” Pezeshkian said, arguing that multiple exchange rates had benefited intermediaries rather than consumers.
Iran has long used subsidized exchange rates to support imports of basic goods and curb inflation, but critics say the system has encouraged corruption and widened inequality, particularly as sanctions and high inflation have strained the economy.
Pezeshkian said the government had spent about $18 billion on subsidies, adding that the funds could be used more effectively to improve living standards.
“We have given $18 billion in subsidies, when with this amount we could plan so that everyone’s table is the same,” he said.
Late last month, Hossein Samsami, a member of parliament’s economic committee, said more than $116 billion in export earnings had not been repatriated since 2018, citing official non-oil export data.
The president added that subsidies would not be eliminated but redirected to end consumers rather than producers or intermediaries. He said foreign currency allocations for sectors such as livestock feed would be moved to the final stage of the production chain.
“We are not removing subsidies; we are giving them to the final consumer,” Pezeshkian said.
Iran operates several exchange rates, including a market rate that trades far weaker than official or subsidized levels, creating price gaps that economists say incentivize arbitrage.
The preferential exchange rate system was introduced in April 2018 under former president Hassan Rouhani, when the dollar was fixed at 42,000 rials in an effort to stabilize prices amid mounting sanctions.
Iran’s economy has been under sustained pressure from US sanctions, high inflation and currency depreciation, complicating repeated efforts by successive governments to reform subsidies and unify exchange rates.
