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117,000. The rial has lost around 60% of its free market value against the dollar since the US unilaterally withdrew from the multilateral nuclear deal in May last year, prior to which a dollar would only buy you IRR32,000. Annual inflation, meanwhile, is this year on course to hit 40% in Iran, according to the IMF, which also predicts a GDP contraction of around 6% (and possibly much more if the US succeeds in driving Iranian oil exports down to anywhere near zero).
The bill states that a two-year transition period would be needed to successfully move from the rial to the toman.
Colloquially in Iran, the toman, which has 10 times the value of the rial, is the de facto currency used in daily transactions. For instance, IRR10,000 is known informally as IRT1,000 in daily transactions and prices stated online.
“After the transition phase, past liabilities based on the rial would be fulfilled only in toman,” the government states in its plans.
On August 7, Hemmati said that ​removing four rial zeros from banknotes​ “will not break the bank.”
“The initiative does not incur additional costs as the government annually destroys and prints 700 million banknote pieces,” Hemmati said to reporters outside a parliament meeting, following questions from MPs on the plan.
During the session, the CBI governor noted that by pushing ahead with the redenomination scheme to make the currency more presentable and easier to handle in calculations, the country could remove some 4bn banknotes from circulation.
“Truth be told, people no longer use the rial in their daily transactions,” he said.
7.1​ Cryptocurrency
Iran permits digital coin mining in a brushstroke
The Iranian government has approved a bill that recognises digital coin mining as an industrial activity. ​The development could lead to regulated business that could generate more forex revenues for Iran, the Iranian Chamber of Commerce said in a press release on July 29.
Iran has to date had a​ ​confusing relationship with cryptocurrencies​. ​Different factions of the country’s power structure are either for or against the cryptocurrency industry. In recent months, military officers also waded into the debate, saying the industry poses real threats to Iran. However, despite the misgivings, Iran, suffering punishing US sanctions, has changed tack and has welcomed cryptocurrency mining and trading in recent weeks.
The cabinet approved the bill after the government economic commission passed it early last week. The bill, however, does not allow the use of digital coins, such as Bitcoin, inside Iran, saying such transactions would not be supported by the Iranian banking system.
Iran’s Finance and Economy Minister Farhad Dejpasand said: “According to this commission's approval, the government recognised the phenomenon of digital currencies and there won’t be any prohibition on importing mining machines from now on.”
35​ IRAN Country Report​ November 2019 www.intellinews.com