Iran has approved a monetary reform plan to remove four zeros from its local currency over the coming years. The measure is intended to simplify transactions after years of high inflation.
According to Reuters, the currency tracking website Bonbast.com shows that inflation above 35% has pushed the rial to 1,150,000 rials against the US dollar on the free market. This has made it difficult for Iranians to interpret invoices and financial statements.
State media reported that parliament passed the reform on Sunday after addressing objections from the Guardian Council. The bill had been under discussion for several years.
Shamseddin Hossein, head of parliament's economic committee, told state television, "The currency will remain the rial, and the changes will not happen overnight." He added that the central bank has up to two years to prepare for the reform, after which a three-year transition period will follow, during which both denominations will circulate.
Hossein explained that the reform would make the rial easier to use in transactions and accounts, noting that high inflation has reduced the usefulness of banknotes.
However, the measure has sparked debate. MP Hussein Samsami said in comments to the Students' News Agency, "The prestige of the local currency cannot be revived by removing four zeros. Instead, this can only be achieved by strengthening the real value of the currency."
Several other countries have implemented similar measures when confronted with high inflation. Venezuela has carried out multiple monetary reforms in recent years, but continues to face inflationary pressure.
Source: Maaal
