10 Pahlavī – Iran

In 1978, Iran's currency situation was a reflection of the profound economic and political instability that preceded the 1979 Revolution. The Iranian Rial was under severe pressure due to a combination of factors, most notably the massive government spending funded by oil revenues during the preceding boom years. This spending had fueled inflation, created economic distortions, and led to a growing sense of inequality and resentment among the population who felt left behind by the rapid, uneven modernization under the Shah.

Politically, the currency and broader economy were destabilized by widespread strikes, particularly in the vital oil sector, which began in late 1978. These strikes drastically cut oil exports, the state's primary source of foreign exchange and revenue. As capital flight accelerated amidst the escalating protests and violence, the government faced a severe balance of payments crisis. Confidence in the economy evaporated, and the fixed exchange rate regime, which had pegged the Rial to the US dollar, became increasingly unsustainable as foreign reserves dwindled.

Consequently, by the end of 1978, the Iranian economy was in a state of paralysis, with the currency's stability fundamentally undermined. The government was losing its ability to manage monetary policy or support the Rial as it fought for its very survival. This economic breakdown, characterized by soaring prices, shortages, and financial uncertainty, exacerbated public discontent and became a powerful catalyst for the revolutionary movement that would topple the monarchy just weeks later, in February 1979.