Iran has changed its currency, Riyal is now Toman

Iran’s parliament has passed a bill allowing the government to slash four zeros from the rial, Iranian state media reported on Monday, after a sharp fall in the value of the currency as a result of crippling U.S. sanctions.

Iran’s national currency will be changed from the rial to the Toman, which is equal to 10,000 rials, under the bill.

Background

• This move comes after a sharp fall in the value of the currency as a result of crippling US sanctions.
• The currency has been devalued 3,500 times since 1971. It declined steadily since the Iranian Revolution, 1979 brought the religious government to power.
• The idea of removing four zeros has been floated since 2008 but gained strength after 2018 when the US exited Iran’s 2015 nuclear deal and reimposed sanctions and the rial lost more than 60% of its value.

The devaluation of the rial has been marked by four key turning points:

• The Islamic Revolution of 1979. When the government of the Western-allied Shah collapsed and an ideological cadre of mullahs took over, many entrepreneurs and business moguls left the country for fear of persecution, and they took their wealth with them.
• The end of the Iran-Iraq war in 1989. It took Iran almost eight years to rebuild its shattered economy, during which time the rial lost almost 100% of its value compared to the US dollar thanks to rampant inflation and the unchecked printing of cash.
• Last years of hard-line President Mahmoud Ahmadinejad’s tenure. Before he left power in 2013, Iran was slammed with severe international sanctions that saw the rial hemorrhage almost 400% more of its value on global currency markets.
• The last major turning point, which is still playing out, came when President Donald Trump pulled the U.S. out of the nuclear deal. It was like an electric shock that sizzled through every aspect of Iran’s already beleaguered economy. The rial’s plunge has continued, leaving it almost 600% weaker against the US dollar than it was before the Revolution.

Iranian Nuclear Program:

• In July 2015, the United Nations Security Council member countries – the United States, Russia, China, France and Britain and Germany and the European Union (EU) – entered into a nuclear deal with Iran in the Austrian capital Vienna.
• It consists of five permanent members of the Security Council and Germany jointly called FIVE + ONE COUNTRY.

UPSC