Iran Changes Its Currency From ‘Rial’ To ‘Toman’

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For many years, Iran’s government debated changing the national currency, the rial, by basically slashing four zeros off its face value — an acknowledgment of how American sanctions and economic mismanagement have contributed to inflation in the country.
Inflation rate of 40 percent
Since 2018 when the Trump administration repudiated the nuclear agreement and reimposed sanctions on Iran, the value of Iran’s currency has fallen by roughly 60 percent.
The coronavirus pandemic, which turned Iran into a regional epicenter of the disease, appears to have played a decisive role, contributing to a further devaluation of the rial since February.
On Monday, the Iranian Parliament essentially took that step, authorizing the replacement of the rial with another basic unit of currency called the toman.
Each toman will be worth 10,000 rials under the new system.
The Guardian Council,
a body of conservative clerics that supervises the Parliament, is expected to ratify the law.
Then the Central Bank will have two years to implement the change — removing rials from circulation and issuing tomans instead.

WHY IRAN HAS TO DO THIS?

The currency has been devalued 3,500 times since 1971 and that Iran had no choice but to “save the face” of its national currency.

Supporters of the change said slashing the extra zeros would vastly simplify financial calculations in Iran by eliminating the need for Iranian shoppers to carry loads of rials to make purchases, which they must do now because of inflation.
But opponents argued that the plan was an added expense at a time when the government was already facing a budget deficit of between 30 to 50% for this coming fiscal year.
Iran derives most of its export revenue from oil and gas sales.
The effect of the currency change, the critics said, amounted to just cosmetic window dressing.

While the rial is used in official documents,
Iranians have always referred to their currency in daily conversation and business transactions as the toman.
With one toman being equal to 10 rials.
To evade sanctions,
Iran has also turned to cryptocurrency.
The country has approved more than 1,000 bitcoin mining licenses, including Iminer recently.

In the last few decades, a number of countries have reverted to redenomination to fight runaway inflation.
The highest denomination note was 100 trillion Zimbabwean dollars – and that wasn’t enough to buy a loaf of bread.
Argentina, Brazil and Nigeria are among others.