Protests over Iran's soaring cost of living have spread to several universities in Tehran, with students joining shopkeepers and bazaar merchants in calling on the government to take action, semi-official media reported.

Iran's rial currency has lost nearly half its value against the dollar in 2025, with inflation reaching 42.5 per cent in December in a country where unrest has repeatedly flared in recent years, and which is facing US sanctions and threats of Israeli strikes.

President Masoud Pezeshkian said in a social media post late on Monday that he had asked the interior minister to listen to the "legitimate demands" of protesters, while government spokesperson Fatemeh Mohajerani said a dialogue mechanism would be set up and include talks with protest leaders.

"We officially recognise the protests … we hear their voices and we know that this originates from natural pressure arising from the pressure on people's livelihoods," she said on Tuesday, in comments carried by state media.

Shops in Tehran's Grand Bazaar sit closed following protests over a plunge in the Iranian currency's value. (WANA via Reuters: Majid Asgaripour)

Protesters march through Tehran's streets

Videos have emerged from Iran that show scores of people marching along a street chanting "Rest in peace Reza Shah", a reference to the founder of the royal dynasty ousted in the 1979 Islamic revolution.

Footage aired on Iranian state television on Monday also showed people gathered in central Tehran chanting slogans.

The semi-official Fars News Agency reported that hundreds of students held protests on Tuesday at four universities in Tehran.

Some Iranians voiced support for the protests on social media, with one, Soroosh Dadkhah, saying high prices and corruption had led people "to the point of explosion" and another, Masoud Ghasemi, warning of protests spreading across the country.

Iran's president says he is open to hearing the "legitimate demands" of those who have protested over the past week. (Majid Asgaripour/WANA via Reuters)

This week's protests are the first such major event to take place in Iran since Israeli and US strikes on the country in June, which prompted widespread expressions of patriotic solidarity.

Iranian authorities have quashed previous bouts of unrest that have flared over issues ranging from the economy to drought, women's rights and political freedoms, leading to violence and widespread arrests.

The government has not yet said what form any dialogue with the leaders of this week's demonstrations would take.

Mr Pezeshkian said in a meeting with trade unions and market activists on Tuesday that the government would do its best to resolve their issues and address their worries, according to state media.

Sanctions hammer economy

Iran's economy has been in deep trouble for years, particularly since US sanctions were reimposed in 2018 by US President Donald Trump, who ended an international deal over the country's nuclear program during his first term in office.

United Nations sanctions on the country were reimposed in September, and the country's leaders have reportedly held several high-level meetings on how to avert economic collapse, circumvent sanctions and manage public anger.

Iran's economy has been in trouble for years, particularly since US sanctions were reimposed in 2018. (Majid Asgaripour/WANA via Reuters)

Economic disparities between ordinary Iranians and the clerical and security elite, along with economic mismanagement and state corruption — reported even by state media — have fanned discontent at a time when inflation is pushing many prices beyond the means of most people.

The currency slid to 1.4 million rials to the US dollar on Tuesday, according to private exchange platforms, a record low after starting the year at 817,500 rials to the dollar.

Monthly annualised inflation figures have not dropped below 36.4 per cent since the Iranian new year started in late March, according to official figures.

Iran's central bank chief resigned on Monday, with Iranian media saying the government's recent economic liberalisation policies had put pressure on the open-rate rial market, where ordinary Iranians buy foreign currency.

Most businesses use official currency exchanges where the rial price is supported.

Reuters