Iranian President Masoud Pezeshkian announced his government will end preferential foreign currency allocations, arguing that multiple exchange rate mechanisms have fuelled corruption and inequality, whilst promising to redirect subsidies directly to consumers.

The announcement by the top Iranian elected official comes as protests are ongoing across the country, with more than half a dozen people killed, many more arrested by police and security, according to different accounts both inside the country and from expatriate-based media. 

Speaking at a meeting with political and civil society figures in Chaharmahal and Bakhtiari province on January 1, Pezeshkian said anyone receiving dollars at rates equivalent to IRR280,000 or IRR700,000 was benefiting from state-backed rent-seeking.

"We will no longer give out dollars at IRR285,000," the president said. "Whenever we give dollars to intermediaries, they are consumed by the system itself," he added, referring to leakages and misuse along production and distribution chains.

Pezeshkian said the government does not intend to abolish subsidies but plans to overhaul distribution methods. "We are not removing subsidies; we are delivering them to the final consumer," he said,

He added that foreign currency allocated for essential goods, particularly livestock feed and agricultural inputs, will be transferred to the end of the production chain rather than upstream actors.

Total annual subsidies amount to between $10bn and $18bn, resources that could equalise household living standards if properly targeted, according to the president. He said the state is prepared to draw on national reserves if necessary to stabilise economic conditions.

The announcement comes as Iran faces persistent inflation exceeding 40%, currency volatility and pressure on public finances. Multiple exchange rates, chronic budget deficits and structural weaknesses in the banking system have exacerbated economic difficulties.

Pezeshkian linked economic reform to political cohesion, arguing that internal disputes and policy inconsistency worsen economic outcomes. "Any policy that produces injustice is doomed to fail," he said. "But policies aimed at resolving people's problems will endure."

The president confirmed that recent senior appointments in the energy and banking sectors were made based on expert advice rather than factional considerations.