The Iranian Parliament voted to pass an amendment to the Iranian Currency and Banking Law, which changed the official currency "Rial" to "Toman".
The new bill requires the Central Bank of Iran to recalculate the exchange rate in "Turman" after considering currency reserves and commitments to the International Monetary Fund. The law also clearly stipulates that "Rial" will maintain its credibility with "Turman" for two years. During this period, old coins and banknotes will be gradually collected and replaced with new coins and banknotes.
The new currency conversion will be 10,000 rials for 1 Turman.
Iran ’s plan to change its sovereign currency has been brewing since 2008. In recent years, after the United States unilaterally restarted its economic sanctions against Iran, the Iranian currency has continued to depreciate, and the situation of introducing Turman is more urgent.
Serious inflation is the main factor of currency reform
In recent years, under the influence of US sanctions, the Iranian rial exchange rate has continued to fall. In the past 10 years, the Iranian rial has depreciated more than 400% against the dollar.
To make matters worse, a new crown epidemic broke out early this year, which has further exacerbated the devaluation of the Iranian currency since February. This seems to make Iran determined to issue a new currency.
An Iranian government spokesman said: "Removal of four zeros is necessary, which will simplify financial transactions."
According to the latest economic data released by the IMF, Iran ’s economic growth rate is still negative in 2020, which is -6%, and it is -7.6% in 2019; the inflation rate is 34.2%, 41.1% last year, and the unemployment rate is 16.3%, Last year ’s 13.6%, coupled with the impact of the epidemic on it, the continued downward momentum of the Iranian economy was difficult to change for a while. Nowadays, with the spirit of "broken wrist", the national currency is forcibly replaced, in order to minimize the negative impact of the US sanctions.
The new national currency is actively delinked from the US dollar and linked to the RMB
In fact, long before Iran announced the issuance of a new currency, it has taken the first step, that is, gradually abandoning the US dollar and using RMB for its international trade, especially the settlement of oil trade. According to the prediction of relevant experts, the exchange ratio between the new national currency and the RMB is 1: 1. Of course, in addition to Iran's gradual completion of the "de-dollarization" action, countries such as Venezuela have also begun and regard the renminbi as their important alternative currency. These signs show that the stability of the dollar in the world has been unprecedentedly challenged.
