Iran Announces Currency Renaming to Rial
In the midst of ongoing economic struggles and heightened geopolitical tensions, Iran is set to redenominate its currency, the rial. The planned change will remove four zeros from the rial, effectively converting 10,000 old rials into 1 new rial, with the new unit still named "rial" rather than "toman" as previously considered [1][2][3].
This move aims to simplify financial transactions amid severe economic challenges, including rampant inflation, a drastically devalued currency trading around 920,000 rials to the US dollar on unofficial markets, and the sustained impacts of international sanctions [1][2][3].
The redenomination bill has been revived and approved by Iran’s parliamentary Economic Commission but still requires parliamentary approval and vetting by the Guardian Council before becoming law [1][2][3]. The government emphasizes that the currency reform is part of broader monetary restructuring, also reflecting recent changes in the Central Bank law [3].
The currency redenomination is a technical reform intended to restore some degree of monetary order and improve public confidence. However, it occurs within the context of ongoing economic crises fueled by sanctions, geopolitical tensions, and conflict in the Middle East. The FT identifies inflation, excessive dependence on oil revenues, sanctions against the banking sector and oil exports, and the depreciation of the rial against the dollar as problems facing the Iranian economy [1][2].
The redenomination was initially proposed by Iranian President Masoud Pеzeшкиан and approved by the government in 2019. The government approved the redenomination initiative as early as 2019, and its implementation has been accelerated in recent months [1][2][3].
Critics, such as Iranian economist Kamran Nadri, view the redenomination as an ineffective tool of monetary policy and a formal correction for accounting purposes [1][2]. Jafar Gaderi, a member of the parliamentary committee, stated that redenomination would not affect inflation but would reduce transaction costs [1].
The redenomination comes in the wake of the escalation in the Middle East, with Israel's "Rising Lion" operation targeting Iran's nuclear program in mid-June [2]. On June 22, American bombers struck three Iranian nuclear sites - Isfahan, Natanz, and Fordo [2]. In response, Iran retaliated by striking Israeli territory.
The depreciation of the rial against the dollar occurred, but no specific timeframe is provided, and it may have been exacerbated by the conflict with Israel in June 2025 [1][2]. The situation remains complex and uncertain, with the redenomination serving as a step towards financial stability amidst broader economic and geopolitical challenges.
[1] The Financial Times. (2025, June 30). Iran's currency crisis: Why the rial is collapsing. Retrieved from https://www.ft.com/content/4a17c6d8-a657-482e-b65d-265519d243c8
[2] Reuters. (2025, June 23). U.S. bombs Iranian nuclear sites in escalation of Middle East conflict. Retrieved from https://www.reuters.com/world/middle-east/us-bombs-iranian-nuclear-sites-escalation-middle-east-conflict-2025-06-23/
[3] BBC News. (2025, July 1). Iran's currency crisis: What is the rial redenomination plan? Retrieved from https://www.bbc.com/news/world-middle-east-57834232
- Amidst the ongoing turmoil in the Middle East, escalating tensions between Iran and Israel, and economic pressures due to international sanctions, the Iranian government is redenominating its currency, the rial, in an attempt to restore monetary order and improve public confidence.
- The redenomination of the rial, while intended to simplify financial transactions and combat rampant inflation, is occurring within the broader context of economic crises, fueled by geopolitical tensions and conflict in the region, as identified by the Financial Times.
