From 10,000 rials to just one: Iran removes four zeros from its currency

BarcelonaIran will cut four zeros from its currency, the rial, according to a government proposal approved Sunday by its parliament's economic committee. Thus, the Asian state will redenote the value of its currency, which will retain its current name, so 10,000 rials will become one zero.

The reduction in zeros comes after decades of high inflation and economic crisis that have directly impacted the purchasing power of the currency and, by extension, of Iranian families. This devaluation of the rial has been further aggravated by the 12-day war During which first Israel and then the United States bombed the country's nuclear facilities. According to the new law, the new rial will be divided into 100 centimes, called gheranos. Financial TimesIn the last quarter of a century, countries such as Romania, Türkiye, and Zambia have also implemented similar reforms to their currencies to simplify price denominations.

The inflation that Iran has endured for decades is largely due to the low value of its currency on international currency markets since the ayatollahs' regime came to power in 1979, with the end of the revolution that overthrew the regime. The Islamist invasion of the US embassy in Tehran that same year increased Washington's economic pressure on the Asian country.

In fact, Iran is isolated from the international financial system and is subject to trade sanctions for limiting both oil exports and the entry of foreign capital, three obstacles that further depress the value of the rial in the currency markets. The heavy dependence on energy exports and the lack of foreign investment are two of the main problems of the Iranian economy, which also suffers from widespread corruption in public administrations.

The vice president of the economic committee of the Iranian Parliament, Jafar Ghaderi, assured that the elimination of zeros would not have any impact on inflation, but would lower the cost of monetary transactions, according to the Financial TimesBeyond that change, the government has not proposed any other economic reforms, nor is there any prospect of reaching agreements with the US or the European Union to mitigate sanctions, although before the Israeli attack in June, it had held diplomatic talks with Washington to reduce its nuclear program in exchange for the lifting of some of these measures.