Iran slashes zeros off national currency to curb economic freefall

Iran’s attempt to save its drowning economy comes amid persistent inflation of about 40%.

By Jewish Breaking News

Iran’s parliament has voted to lop four zeros off the country’s national currency after years of devastating inflation and sanctions left the rial worth less than a penny.

Lawmakers passed the measure Sunday with 144 votes in favor, 108 against, and three abstentions out of 262 present.

Under the legislation, the rial will be redefined as equal to 10,000 current rials and will introduce a new subunit called the qiran or gheran, worth one hundredth of a rial.

Both old and new rials will circulate for up to three years during a transition period.

Iran’s Central Bank must establish operational procedures within two years of enactment and publicly announce the start of the change through official media.

After the transition period ends, all financial obligations denominated in the current rial will be settled using the new unit.

Shamseddin Hosseini, head of parliament’s Economic Committee, said the measure’s main purpose was to “make banknotes more functional and facilitate financial transactions,” noting that countries like Turkey undertook similar redenominations in 2003 and 2005.

However, Hosseini acknowledged that cutting zeros would not directly reduce inflation or address Iran’s underlying economic challenges, but called it “an unavoidable adjustment” given years of high inflation and declining purchasing power.

Iran’s attempt to save its drowning economy comes amid persistent inflation of about 40%.

Before getting hit with international sanctions in 2018, the rial traded at roughly 42,000 per dollar.

Today it’s worth over 1.1 million, which has destroyed household purchasing power across the board.

Real wages have plummeted 400% over the past decade, according to Iran’s state-run Mardomsalari newspaper, leaving the minimum wage at just $94, down from $235 a decade ago.

Most citizens earn about the rial equivalent of $150 a month, but a small family needs at least $450 just to survive.

Official statistics claim the poverty rate sits at 30%, roughly 25 million people, but independent estimates paint a far darker picture, with anywhere from 50 to 80% of the population now below the poverty line.

Iran’s broader economy is shrinking too. GDP contracted by 2.5% in early 2024, and the International Monetary Fund projects near-zero growth for 2025.

Multiple provinces are seeing inflation above 40%, with Semnan and Hormozgan topping 41%. Some economists warn it could hit 60% if the currency keeps sliding and food markets stay volatile.

Iran has debated currency reform for decades, with earlier efforts proposed under the administrations of Hashemi Rafsanjani, Mahmoud Ahmadinejad, and Hassan Rouhani.

An earlier version in 2019 proposed renaming the currency to the toman, but the latest bill retains the rial as Iran’s official currency.