Iran to Remove Four Zeros from Currency as Rial Faces Record Depreciation Amid Sanctions

The Iranian rial has been experiencing record lows in recent days as the country faces economic challenges (Representational Image)

On Sunday, Iran's parliament approved a significant monetary reform plan to eliminate four zeros from the national currency, the rial, which has been severely devalued amid renewed international sanctions.

The legislation was passed two months after a parliamentary commission revitalized this long-delayed proposal designed to simplify financial transactions, according to the legislature's official website.

Under the newly approved plan, one new rial will replace 10,000 current rials.

Both currency versions will coexist for up to three years, with the central bank having a two-year timeframe to implement the transition process.

The rial has been hitting consecutive record lows recently according to black market monitoring systems, coinciding with the reimposition of United Nations sanctions against Iran.

Last month, Britain, France, and Germany - all signatories to Iran's now-inactive 2015 nuclear agreement - activated the "snapback" mechanism to reinstate international sanctions due to the Islamic republic's non-compliance with the deal.

As of Sunday, the rial was trading at approximately 1,115,000 to the US dollar, compared to around 920,000 when the plan was reintroduced in early August.

The currency redenomination was initially proposed in 2019 but was subsequently postponed.

Before implementation, the plan still needs approval from the Guardian Council and requires President Masoud Pezeshkian's signature to become effective.

In everyday transactions, Iranians typically omit one zero from the rial and use the resulting figure, known as the toman, for most purchases.