Iran Approves Plan to Redenominate Rial, Removing Four Zeros Amid Currency Crisis

Iran’s parliament has approved a long-debated plan to redenominate the national currency by removing four zeros from the rial, which has sharply depreciated amid renewed international sanctions. The bill, passed on Sunday, comes two months after a parliamentary commission revived the proposal, which aims to simplify transactions, according to the legislature’s website.

Under the new law, 10,000 current rials will equal one new rial, which will be further divided into 100 Qerans. The Central Bank of Iran (CBI) will oversee foreign currency exchange rates and manage the buying and selling of currency according to monetary policy and foreign currency reserves.

The CBI is expected to draft the implementing regulations within three months, pending approval by the High Board and the Cabinet. Both old and new versions of the rial will circulate for up to three years, with the central bank given two years to fully implement the transition. State TV reported that the “dual circulation phase” will allow both the current rial and the new rial to be used simultaneously for a maximum of three years.

The rial has recently hit record lows on the black market following the re-imposition of United Nations sanctions on Iran. Britain, France, and Germany, all signatories to the stalled 2015 nuclear deal, triggered the “snapback” mechanism last month after citing Iran’s non-compliance, intensifying pressure on the currency. On Sunday, the rial was trading at around 1,115,000 to the US dollar, up from approximately 920,000 in early August when the plan was revived.

The redenomination plan, first proposed in 2019 but later shelved, still requires approval by the Guardian Council and the signature of President Masoud Pezeshkian to take effect. In daily life, Iranians commonly drop a zero from the rial, using the resulting figure, called the toman, for most transactions. Analysts note that while removing four zeros is intended to simplify financial transactions and accounting, it does not address the underlying inflationary pressures affecting the economy.