Page 33 - IRANRptDec19

Redenomination bill sent to Iranian parliament, new details revealed
Iran’s redenomination bill was sent to the Iranian​ ​parliament by the cabinet​ ​on August 21 for debate among MPs, according to ICANA.
Iran is set to remove four zeros from its currency, the Iranian rial (IRR) in the next two years, provided all relevant bodies, including the Guardian Council, government committees and parliament give their blessing. As part of the new currency, to be officially called the “toman”, a new sub-currency named the “parseh”, equal to 100 toman, will be legislatively introduced.
Officially called the “Reforming Monetary and Banking Law,” the bill stems from old ideas revived by Central Bank of Iran governor Abdolnasser Hemmati and approved by the cabinet a few weeks back. It is likely to face little resistance due to the general feeling of frustration felt by many in the face of the severely weakened rial. Currently, USD 1 is equal to IRR 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
33​ IRAN Country Report​ December 2019 www.intellinews.com