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After Huge Devaluation Iran To Slash Four Zeros From Currency

Iranian currency is displayed at an exchange shop in Tehran, August 1, 2019

The Islamic Republic President Hassan Rouhani has submitted a bill to Majles (Parliament) proposing the elimination of four zeros from the Iranian national currency rial.

Based on the bill, Iran's national currency will be changed from rials to toman, and each toman would be equal to 10,000 rials.

On August 6, Governor of the Central Bank of Iran (CBI), Abdolnaser Hemmati, maintained that dropping four zeros from the national currency will have no impact on inflation rate adding that the CBI is ready to implement the plan.

He insisted that removing four zeros will have no costs for the government since CBI annually prints about 700 million new banknotes and replacing the old ones with the new ones is a routine procedure, the state-run Mehr News Agency (MNA) reported.

If passed by the Parliament and ratified by the Guardian Council, Iran's Central Bank would in effect devalue the rial and rename it as toman, a Mongolian word meaning 10,000.

The CBI would have two years to create the new toman currency. Once created, a toman will be worth 100 "parseh", a new unit, like a cent to be created for the first time.

Parseh, (old Persian Parsa) is the other name of Persepolis, the ceremonial capital of the Achaemenid Empire (ca. 550–330 BC), situated sixty km (approximately 38 miles) northeast of the city of Shiraz in Fars Province, southern Iran.

Proposals to drop four zeros from the currency have been floating since 2008, but it gained strength immediately after Washington decided to reimpose two batches of sanctions on Tehran, and consequently, the rial lost its value fourfold against the U.S. dollar in 2018.

Meanwhile, rial’s weakness disrupted Iran's foreign trade last year and helped to boost annual inflation fourfold to nearly 40% last November.

On Wednesday, August 21, the rial traded 116,500 to $1. At the time of the endorsement of the Joint Comprehensive Plan of Action (JCPOA) or Tehran's nuclear deal with world powers in 2015, the rial traded 32,000 against one dollar.

Before the 1979 revolution the dollar was around 70 rials.