DUBAI (Reuters) -Iran has gained parliamentary approval for a monetary overhaul to remove four zeros from its national currency over the next few years to simplify transactions after years of inflation.
Years of inflation above 35% have caused Iran’s currency to plunge to 1,150,000 rials to the dollar on the free market, currency tracker bonbast.com shows, making it difficult for people to make sense of bills or financial statements.
The approval was reported by state media on Sunday after parliament had resolved objections from the Guardian Council to pass a bill that had been in the works for several years.
“The currency remains the rial and changes won’t be overnight,” the head of parliament’s economic commission, Shamsoldin Hossein, told state TV.
“The central bank has up to two years to prepare the ground for this change. After that, there will be a transition period of three years when both denominations will be used.”
The move will make the rial easier to use in transactions and calculations, Hossein said, adding that high inflation had severely diminished the usefulness of banknotes.
The move remains contentious, however.
“A national currency’s prestige isn’t revived by removing four zeros. Instead, that can only be done by strengthening the real value of the currency,” Iranian MP Hossein Samsami was quoted as saying on Sunday by the Iranian Students News Agency.
Several countries have sought to drop zeros from their national currency when faced with high inflation. Venezuela has had several monetary overhauls in recent years but continues to suffer from high inflation.
(Reporting by Dubai NewsroomEditing by David Goodman)
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