Addressing the mounting skepticism surrounding the wisdom and viability of the government plan for redenomination of the rial under the present economic conditions, Abdolnasser Hemmati said “the zeros have lost their value and now is the opportune time for redenomination,” the CBI website reported.
The skepticism stems from concerns that lopping off zeros from the national currency may not produce the desired results at a time when the economy is saddled with rampant inflation and a list of other ills.
Those opposed to the plan argue that it will deliver only when it is intertwined with structural and fundamental economic reforms, at times criticizing the government for flirting with the currency revaluation plan instead of fixing other more pressing economic problems, according to Financial Tribune.
“We have undertaken a multitude of studies. The fact is that in essence the rial has lost its value due to years of inflation. Changing the face value of the currency is indeed a necessity,” he said defending the government-initiated rial revaluation bill in the parliament on Sunday.
The government approved a plan proposed by the CBI in August based on which four zeros will be lopped off from the national currency and the unit will change officially from the rial to the popularly used ‘toman’.
The bill must be debated in the Majlis to become law. The parliament on Wednesday approved the single-urgency of the bill.
Galloping inflation and rapidly declining purchasing power, the ballooning volume of banknotes, hassles of using large digits in financial transactions, tanking of the rial against all major currencies and popularity of the toman are seen as other objectives of the oft-mentioned plan.
Pointing to dramatic decline in the cost of money printing when the bill comes into force, Hemmati said currently close to 9 billion pieces of banknotes are printed annually which could be reduced to 2.2 billion after the revaluation.
Reckoning another merit, he pointed to the popularity with which people use toman instead of rial.
“People no longer use rial. Regarding the 500,000 rials banknotes [Iran checks], they simply call it 50 tomans no one says 50,000 toman,” Hemmati recalled, stressing the need to shave off the four zeros.