The government of Iran has proposed a decision to introduce a change to its currency. The authorities, in May 2020, voted to approve an amendment to the Monetary and Banking Act of Iran to bring this change into practice.
The present official currency of Iran is the rial. It is currently the second weakest circulating currency in the world, with 1 USD equalling 300,000 rials. The idea of dropping the four zeroes with the redenomination of currency is an attempt to handle the fall in currency value and the rising inflation in the nation.
Iran’s New Currency Name – What You Should Know?
The name of the new currency of Iran will be ‘Toman’. According to the government, one toman will equal 10,000 rials. This change is likely to occur between 2020 and 2022. However, the new bill will require approval from the clerical body before it can come into effect.
Once the bill is passed, the Central Bank will replace the rials with tomans in two years' time. This means the existing currency will continue to be valid alongside the new currency for two years. The old bills and coins will be slowly collected during this period to replace them with new ones.
Iran had been pondering over the idea of cutting four zeroes from its currency since 2008 but it gained strength after the American President announced exit from the 2015 nuclear deal, imposing huge sanctions on Iran, accusing it of not following the terms mentioned in the deal. Following these sanctions, the currency of Iran lost over 60% of its value.
The high rate of inflation and weakening currency have resulted in street protests since 2017. Reportedly, the Iran government has decided to bring a change to its currency to offset the fallout from inflation caused by US sanctions.
However, experts suggest that this decision is not likely to impact the inflation rate in the country. It is rather a general move that leaves the values of currency and commodities unchanged.
The Iranian currency has been devalued 3500 times since 1970 and declined continuously since 1979. The change of currency from rial to Toman was a much-needed step to simplify financial transactions and calculations.
Overall, this represents a bright new chapter in Iran's contention with currency devaluations and inflation.
Putting behind a tumultuous history of manipulations, sanctions, and mismanagement, the country's economy should unlock significant value over the next few years owing to the same.
FAQs About Iran’s New Currency Name
- How many rials are in a toman?
One toman equals 10,000 Iranian rials.
Redenomination of currency is when a nation revalues the currency as a result of inflation or devaluation. It simply means changing the face value of the circulating currency.
- When will the new currency come into effect?
The bill for currency change needs approval from the Guardian Council, a clerical body supervising the Parliament. Once it approves the bill, the Central Bank will change the currency within two years.
- Who presented the draft bill for currency change?
The draft bill was presented in 2019 by the governor of the Central Bank of Iran, Abdolnasser Hemati as a response to the devaluation of the currency and increasing inflation.