Iran Backed Denomination To Remove Four Zeros From The Rial

Iran's currency has depreciated significantly due to the sanctions imposed against the country.

In Iran, the parliamentary committee on economy approved the main provisions of the government bill on denomination of the national currency, the rial, reports Financial Times.

The committee's head Shamsoddin Hoseini said the new currency will retain the name "rial" and will be equal to 10,000 current rials.

Last year, the country's President Masoud Pezeshkian proposed denomination according to a similar ratio and a new name for the currency - "fog". The denomination initiative was approved by the government of the republic back in 2019, but in recent months the authorities have accelerated its implementation. In general, the issue has been under discussion since the 1990s.

FT notes that the Iranian currency has depreciated significantly due to the sanctions imposed against the country, with the latest blow to the rial coming from the war with Israel and the United States in June.

Another member of the committee, Jafar Ghaderi, said the denomination will not affect inflation but will reduce transaction costs.

Iranian economist Kamran Nadri believes the measure "is neither an effective [instrument] of monetary policy nor a mechanism to control inflation." "It is just a formal adjustment of the monetary unit for accounting purposes," he believes.

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