By Jubin Katiraie
Iranian President Hassan Rouhani has submitted a bill to the country’s Parliament to propose eliminating four zeros from the Iranian national currency rial.
The proposed bill would change Iran's national currency from rials to toman, with each toman worth 10,000 rials.
Abdolnaser Hemmati, the Governor of the Central Bank of Iran (CBI), said on August 6 that dropping four zeros from the national currency will have no impact on the inflation rate, but that the CBI is ready to put the plan into action.
He further said that removing the four zeros from the currency will not increase costs for the government because CBI prints about 700 million new banknotes annually and replacing old ones with the new ones is a routine procedure.
If this plan passes the Parliament and gets ratified by the Guardian Council, then Iran's Central Bank would essentially devalue the rial and rename it as toman (Mongolian for 10,000), returning to a currency name that has not been used officially since the 1930s.
The CBI would have two years to create the new toman currency, but once it is created, it will be worth 100 "parseh", a new unit of currency that would be used for the first time.
For reference, Parseh is an alternative name for Persepolis, the ceremonial capital of the Achaemenid Empire, situated 60 km northeast of Shiraz in Fars Province, southern Iran.
The proposal to drop four zeros from the Iranian currency was first brought up in 2008, owing to the fact that Iranians informally use tomans when discussing financial transactions anyway.
The idea became more popular after the US withdrew from the 2015 nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), and reimposed sanctions on Tehran last year.
In 2018 alone, the rial lost its value fourfold against the US dollar. This further disrupted Iran's foreign trade and inflation rose to nearly 40% last November.
On Wednesday, the rial traded at 116,500 to $1. When the nuclear deal was signed, it traded at 32,000. Before the mullahs stole power from the people in 1979 it was around 70 rials.
However, it’s unlikely that the Parliament will go over the request soon, because it’s been marked as low urgency, meaning that they have two years to deliberate. Given that parliamentary elections are in March 2020, it’s likely that this will be overseen by the MPs elected then and the currency matter may not even be sorted by the time that Rouhani leaves office in 2021.