Amid high inflation, Iran to get a new currency

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News:The Iranian parliament has approved a bill to allow a major overhaul in the country’s currency rial.

Facts:

Key Features of the Bill:

  • It allows the government to slash four zeros from the rial and to replace Iranian national currency Rial with another basic unit of currency called Toman(redenomination).Each Toman will be equal to 10,000 rials.
  • The rial will remain legal tender alongside Toman for two years during which the old coins and bills will be gradually collected for new ones to replace them.

Reasons for the change in currency:

  • To ease higher Inflation.
  • To overcome the declining value of the rial against other currencies.
  • To cut the cost of printing banknotes and coins.
  • To ease the psychological impact of using large digits in financial transactions.

Additional Facts:

  • Redenomination: It is the process of exchanging old currency for new currency or changing the face value of existing notes in circulation due to significant inflation and currency devaluation.