Iran to scrap rial as parseh becomes small currency unit

The rial, the currency unit used consistently in Iran for almost a century, will be totally abandoned once the country introduces a redenomination.

Iran’s new unit of currency, smaller than the toman, will be named parseh, not rial, as previously reported in the media, based on the terms of a bill sent by the government to Parliament on Wednesday, Press TV reported.

“Iran’s unit of currency is the toman; each toman is equal to 10,000 current rials and equal to one hundred parsehs,” read the Article A of the Bill to Reform Iran’s Monetary and Banking Law, ratified by the cabinet on August 4, 2019.

The bill said the rial will continue to remain legal tender for a maximum of two years of a transition period, which will begin once the new currency is introduced to the market.

“After the transition period, all liabilities that have been accrued based on the currency unit of the rial will only be settled through the currency unit of the toman,” read a sub-article of the bill, a copy of which was circulating in the Iranian media on Wednesday.

Iran’s decision to slash four zeros off the rial comes less than a year after the national currency plunged in the face of a series of American sanctions.

The rial regained some of its footing last month after the government announced measures to narrow the gap between the price of the currency in the unregulated market and a system meant to collect foreign currencies earned from exports.

Analysts believe that redenomination of the currency in Iran will have a slight psychological impact on the markets as the government tries to improve macroeconomic indicators.

source: Iran Daily