AFP: Iran plans to slash four zeros from its national currency in “one to two years”, seeking parity between its rial and the US dollar, Central Bank Governor Mahmoud Bahmani has said.
TEHRAN, April 11, 2011 (AFP) – Iran plans to slash four zeros from its national currency in “one to two years”, seeking parity between its rial and the US dollar, Central Bank Governor Mahmoud Bahmani has said.
“The new rial (…) will be equal in value to one (US) dollar,” the official IRNA news agency quoted Bahmani as saying late Sunday. He added the plan would take “one to two years” to be implemented.
Bahmani did not indicate whether the authorities would try to maintain a fixed parity between the greenback and the Iranian currency following the planned reform.
Mulled by the government since 2007 and announced by President Mahmoud Ahmadinejad in January 2010, the plan was originally to redenominate the rial by knocking three zeros to recover the value it has lost in recent years.
The Iranian rial has dropped drastically since the Islamic revolution, from 70 to the dollar in 1979, to around 11,000 today.
Bahmani said that the name of the new currency would not change, and that it would be “introduced gradually so that people can get used to it”.
“Some people think removing the zeros will weaken the national currency … but it will instead cut inflation. Removing four zeros will also facilitate trade,” IRNA quoted him as saying.
Ahmadinejad has been criticised for pumping excessive liquidity into the economy to fund infrastructure projects and for causing huge money supply growth by giving loans, triggering high inflation.
The official inflation rate, which has been slowly falling in recent months, stood at 12.4 percent for the previous Iranian calendar year which ended on March 20.
The Central Bank has been regularly injecting considerable amounts of hard currency in the market in recent months to maintain the dollar value at around 11,000 rials.