Iran drops 4 zeroes from its currency: What does it mean?
The Parliament of Iran Sunday October 05, 2025 passed a legislation to drop 4 zeroes from its national currency Rial
Tehran: The Parliament of Iran Sunday October 05, 2025 passed a legislation to drop 4 zeroes from its national currency Rial.
One US dollar as on today equals a huge 1,150,000 Iranian Rials. Dropping four zeroes from the currency will mean one US dollar now equals 115 Iranian Rials.
The Iranian passed the legislation to amend the Monetary and Banking Law with 144 votes in favor, 108 against, and three abstentions out of 262 present.
Why the Decision?
The decision has been taken to in a bid to simplify financial transactions and improve the efficiency of banknotes.
“The reform amends the Monetary and Banking Law to redefine the Rial as equal to 10,000 current Rials and introduces a new subunit, the Qiran or Gheran, worth one hundredth of a Rial”, Iran International reported.
Under the legislation, both old and new Rials will circulate for up to 3 years during a transition period.
The Central Bank of Iran (CBI) must establish operational procedures within 2 years of enactment and publicly announce the start of the change through official media.
According to the new law, after the transition period, all financial obligations denominated in the current Rial will be settled using the new unit.
What difference will it make?
The move comes five years after the Iranian Parliament had in May 2020 approved a bill to change the official currency to 'Toman' which equals 10,000 Rials.
“The move will make the Rial easier to use in transactions and calculations”, Chief of Iran Parliament's Economic Commission, Shamsoldin Hossein, told state TV, adding that high inflation had severely diminished the usefulness of banknotes.
Hosseini added that the abundance of zeros in the national currency had caused accounting and operational difficulties, adding that similar redenominations had been undertaken by countries such as Turkey in 2003 and 2005.
Facing similar challenges, Venezuela had in October 2021, dropped six zeroes from its currency.
Hosseini also acknowledged that cutting zeros would not directly reduce inflation or address Iran’s underlying economic challenges, but called it “an unavoidable adjustment” given years of high inflation and declining purchasing power.
The Iranian MPs passed the bill two months after a Parliamentary Commission revived the long-stalled proposal aimed at simplifying transactions, the legislature’s website says.
The legislation requires approval by the Guardian Council and the signature of President Masoud Pezeshkian to take effect.
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