Iran resurrects strategy to eliminate four zeros from national currency amidst escalating economic turmoil
Iran is once again pursuing a plan to redenominate its national currency, the rial, by removing four zeros, a move that would simplify financial transactions and potentially boost public and international confidence in the country's battered economy [1][2][3][4].
Background
The redenomination plan was first proposed in 2019 but was then put on hold due to political and economic uncertainties. In early August 2025, Iran’s parliamentary economic commission re-approved the plan and submitted it for further legislative and Guardian Council approval [1][2][3][4].
Key Features of the Proposed Redenomination
Under the proposed redenomination, one new rial would equal 10,000 of the current rials. The new rial would be divided into 100 new units called gherans. This change aims to simplify financial transactions and make it easier to handle money due to the current hyperinflation [1][2][3][4].
Current Economic Challenges
Iran is currently grappling with soaring inflation, a free-falling currency, and international sanctions. The rial, according to Farzin, does not have a favourable image in the global economy. These challenges have been exacerbated by the reimposition of sweeping sanctions by the United States in 2018 and Trump's renewed "maximum pressure" campaign against Tehran after returning to office in January [1][3][4].
Potential Benefits
If approved, the redenomination could enhance Iran’s currency credibility domestically and internationally, improving ease of pricing and accounting. It also aims to restore public and international confidence in Iran’s economy and the rial’s image [1][2][3][4].
Challenges and Uncertainties
However, the plan's success depends on broader economic reforms and improving conditions beyond currency adjustments since the rial’s poor image is linked to inflation and sanctions. The timeline for implementation remains uncertain and hinges on political approval processes [1][3].
Recent Developments
In June, Iran's parliament approved new Economy Minister Ali Madanizadeh after his predecessor was removed in a no-confidence vote. Tensions escalated further in June when Israel launched an unprecedented strike on Iran's nuclear and military infrastructure, triggering a deadly 12-day war [1][2][3][4].
In everyday life, Iranians commonly use the toman, which is equal to 10 rials, for simplicity. The revived plan is named 'rial' as the national currency.
The Central Bank Governor, Mohammad Reza Farzin, has reaffirmed his commitment to the plan. The revived plan must still pass a full parliamentary vote and be approved by the Guardian Council. The rial traded at roughly 920,000 to the U.S. dollar on the unofficial street market on Sunday, as reported by local media and the Bonbast website.
[1] Iran News Wire [2] Financial Tribune [3] Reuters [4] BBC News
- Iran's parliamentary economic commission has resumed discussions about redenominating the national currency, the rial, which could help boost public and international confidence in the country's challenged economy.
- If approved, the redenomination plan would simplify financial transactions by removing four zeros from the current rial and replace it with a new unit called the gheran.
- The Turkish parliament, well-acquainted with economic turmoil themselves, may find insights from Turkey's large scale currency reform in 2005, as Iran considers its own redenomination of the rial.
- The success of the redenomination plan is closely tied to broader economic reforms and improvement in conditions beyond currency adjustments, such as addressing issues of inflation and international sanctions.
