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Iran denominates Iranian Rial and changes currency name

Iran denominates Iranian Rial and changes currency name

Iran denominates Iranian Rial, following serious economic difficulties, the need to facilitate cash settlements, and the resumption of harsh sanctions against the country. Also, Iran decided to change its currency’s name.

August 1, 2019 | AtoZ MarketsThe Iranian government approved denomination and renaming of the Iranian Real and will remove four zeros from its national currency.

Iran denominates Iranian Rial to revive the financial market 

The head of the Central Bank of Iran, Abdolnasser Hemmati has confirmed, that the Government approved a plan to drop zeros from the national currency and revert to the currency’s old name, the toman, to simplify transactions. 

Abdolnasser Hemmati was the first politician, who proposed such a strategy in January. Iranian government spokesman Ali Rabiyi told reporters in Tehran: 

The cabinet today agreed on a bill to eliminate four zeros from the currency and that ‘toman’ will be our national currency.”

Toman was the national currency of Iran before the 1932 monetary reform. The word “toman” comes from the Mongolian “Tumen”, the name of an army of 10 thousand horsemen in ancient Mongolia. 

Iranians have used the term toman for decades, for its simple conversion rate: 1 toman is equal to 10 rials. 

The measure is caused by serious economic difficulties and the need to facilitate cash settlements. The economy of oil-rich Iran has been hit hard by harsh sanctions imposed by the US.

Since the President, Donald Trump announced the unilateral withdrawal from the 2015 nuclear agreement with Iran and the resumption of sanctions, the country has been struggling with soaring inflation. 

Three years ago Iranian Real’s rate was 37 thousand to one US dollar, in the last year, it was traded at the rate of 180 thousand Rials to the Dollar.

This forced people who do not have bank cards to carry huge packs of money with them to pay for everyday goods and services and coins had to be practically abandoned.

The Iranian government is taking actions to overcome economic difficulties

Iran has tried to keep its economic situation in control by monitoring foreign currency rates and cutting down on those moving their money from the rial to other currencies.

Complicated state of the Iranian financial market resulted in enormous lines at the local currency exchange points.

Thus the Iranian authorities resorted to more strict measures, and started arresting the owners of unlicensed exchangers, and freezing the accounts of currency speculators.

In July, following the U.S. president’s comments on bitcoin, Tehran revealed its ready to be launched a gold-backed cryptocurrency. As the local English daily publication reported, the Central Bank of Iran gave permission for the new crypto which will be mined by a small consortium of private Iranian tech companies and be backed by the gold, held in the central bank’s reserve.

Back then the Iranian authorities, stated that cryptos can help provide a better future for the country’s citizens. Furthermore the same month, Iranian authorities revealed the new cryptocurrency mining pricing bill.

The market rate of the Iranian currency now fluctuates within 120 thousand per dollar, and the official, established by the Iranian authorities, is 42 thousand.

The International Monetary Fund forecasts that Iran’s economy will shrink another 6% this year due to sanctions and rising tensions in the Middle East.

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.