Rial Redenomination Undecided

EghtesadOnline: Lawmakers are studying a proposal by the government and the Central Bank of Iran to slash four zeros off the national currency and switch the national currency from the rial to toman.

News ID: ۷۸۶۶۶۴

13 July 2021

"The Economic Commission and the Majlis Research Center are still studying the proposal.  This is a time-consuming process," Hossein Marhaba, spokesman of the Majlis Economic Commission told YJC news agency at the weekend.

President Hassan Rouhani sent the redenomination bill to the Majlis in 2019.  The ‘Reforming Monetary and Banking Law’ bill, calls for removing four zeros from the national currency and  officially recognize the commonly used toman as legal tender.

Accordingly, the minor monetary unit of the toman would be  ‘parseh’.

If the bill is okayed by the legislature and becomes law, 10,000 rials will be equal to 1 toman and each toman 100 parseh.

Lopping off zeros will not have any potential effect on the inflation rate, Marhaba said. "But replacing rial with the toman would be useful in facilitating daily monetary transactions."

Toman has a different inference from rial and the people never use or refer to the rial in their day-to-day transactions save for writing checks and in official money dealings.

Among other things, the initiative aims to revive the value of the rial, facilitate monetary transactions, cut the cost of printing banknotes and coins and enhance efficiency of the lethargic financial sector.

Unlike the government and the central bank, some lawmakers say the switch would be costly in light of the high and rising inflation.

Opponents, including other lawmakers and private businesses have criticized the government for ignoring other key economic indices and pushing for the toman that very likely would bring in its wake higher consumer price inflation.

Economic and financial analysts say a new currency format will have zero direct impact on the economy unless it is part of a comprehensive and sustainable effort to restructure the economy, curb inflation and improve management.