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Iran to Remove Four Zeros from National Currency
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«Change the currency» .. Tehran's trick to escape the economic collapse .. Central Bank of Iran proposes to delete 4 zeros from the national currency .. And the Cabinet approves
«Change the currency» .. Tehran's trick to escape the economic collapse .. Central Bank of Iran proposes to delete 4 zeros from the national currency .. And the Cabinet approves
Thursday, August 08, 2019[size=26]At its meeting held on July 31, the Iranian cabinet approved the proposal of the Central Bank of Iran, which was submitted in January, to delete four zeros from the national currency (rial) and change the currency from riyal to toman, so that one toman equals 10,000 riyals, after That was equal to only 10 riyals. According to official statements, Toman will be started after two years and the riyal will be canceled except among Iranian banks that will continue to do so.[/size]
[size=26]The move comes as an attempt to “beautify” the country's economic reality in the face of economic bottlenecks that have been exacerbated by the U.S. withdrawal in May 2018 from the 2015 nuclear deal, and the imposition of further economic sanctions in September 2018, including in the oil and energy sectors.[/size]
[size=26]Previous attempts[/size]
This was not the first time the Iranian government was considering deleting some zeros from its national currency.This step was considered in 1994, when inflation in the country rose to nearly 49% from a single figure (below 10%). Then came the second thought to delete some zeros from the currency at the time of former Iranian President Mahmoud Ahmadinejad, when he announced in 2010 the intention to delete three zeros from the currency, but it did not reach the point of implementation.
In December 2016, the government of President Rouhani agreed to delete zero from the national currency, but this decision was not implemented, because the parliament did not approve it as a weak step and will not affect the economic situation of the state, but this time it seems that the parliament will approve the government decision Remove four zeros from the currency to try to alleviate the burden of inflation and facilitate market transactions.
[size=26]Why is Iran changing the currency at the moment?[/size]
Some countries rely on economic tricks in the face of depreciation of their currency, either by deleting some zeros from the value of their currency or changing the currency completely, and this is what Iran did this time. It is argued that Tehran has resorted to this step to avoid many of the problems that have become prevalent in the market today, which is the continued collapse of the value of the currency against the US dollar; In the end of 2018, the Iranian rial lost more than 60% of its value.In September 2018, the US dollar reached about 190,000 riyals in the free market, and then fell to the present time. 140,000 SR Yale (approximately 14,000 tomans).
Iran also seeks to facilitate the process of payments and reduce the cost of printing, it is enough to imagine that a citizen carrying thousands of coins of riyals to buy some vegetables from the store, where the price of a kilo of meat, for example, 100,000 riyals (one million riyals) , A huge figure too. In addition, Tehran costs a lot to print currency.According to the official statements of the Central Bank Governor, `` Nasser Hemti '', the cost of printing the 500-toman banknotes is 400 tomans (i.e., the cost of printing one currency is approximately 80% of its value).
Perhaps the most important motivation behind this step is to try to control the specter of high inflation, with the withdrawal of the United States from the nuclear agreement and the imposition of sanctions, Iran has become unable to export oil as before, which led to great pressure on the Iranian economy, led to the devaluation of the currency, Accordingly data from the Central Bank of Iran, the money supply in the markets increases by 20-30% annually.In October 2018, the money supply reached approximately 17 quadrillion riyals (one billion billion) and this is a huge figure. We also note that inflation rose from almost 10% in 2017 to 18% after the U.S. withdrawal from the nuclear agreement in mid-2018.Although the Central Bank of Iran stopped announcing inflation, it is currently estimated at around 50%.
In addition to Tehran's efforts to control currency counterfeiting and the black market, countries with high currency counterfeiting problems and the presence of more than one exchange rate on the black market often resort to changing their currency, because the aggravation of the problem always needs radical solutions. Although it failed to try to control currency counterfeiting and the existence of more than one exchange rate, although the official price of the dollar against the riyal reaches (42 thousand riyals for the dollar), it is in the black market up to (140 thousand riyals for the dollar). This, in addition to that the change of currency would lead to alleviate the phenomenon of hoarding money away from state banks.
There is no doubt that changing the currency leaves a good psychological impact on the general public, after the citizen had to carry thousands of coins to go to the market, will have to carry a much less amount, omitting the four zeros will make the price of a kilo of meat mentioned above (100 thousand TOMAN to 10 TOM, the free market exchange rate will be 1.4 TOM to USD (14,000 TOM), and a currency change from Rial to Toman will lead to the consolidation of official accounts In the past with the activity of consumers and producers in the market that was done in the Toman.
[size=26]The future of the new currency
Although the Iranian government, led by President Hassan Rouhani, has agreed to change the currency to the Toman, this decision still needs to be approved by the parliament and the Guardian Council, and therefore there is still a lot of time to actually start implementing this step, especially with the conservative announcement. The Central Bank of Iran, that the implementation of this step requires further meetings and consultations and a plan to withdraw the old currency and print the new currency, which means that the launch of the new currency (Altoman) needs at least two years.
It can be said that the introduction of a new currency in any market experiencing currency deterioration and devaluation, it is true that it affects the psychological morale of the citizens well, but this effect is «limited and temporarily», that is, a short-term effect, disappear over time, and the discovery of citizen that the value The purchasing currency is still the same.
The key factor in the success of the process of changing the currency or deleting zeros from its value in the extent of real change in the economic structure of the state, if there is no clear economic plan coinciding with the change of currency, the economic situation will deteriorate further, for example in the case of Turkey In 2005, Turkey removed six zeros from its currency (from one million Turkish lira to one US dollar, one Turkish lira was also equivalent to one US dollar), and it is true that this move has been relatively successful, with the currency depreciating again in 2018. And yet, especially with not There is a real and institutional reform (particularly the crisis of the removal of the Governor of the Central Bank and the intervention of President Erdogan in the monetary policy of the Bank).
We see this also in Venezuela, where it removed five zeros from its national currency (Bolivar) in July 2018, in an attempt to alleviate the crisis of the collapse of the economy with the decline in oil prices since 2014, where oil production accounts for 96% of the national income of the state, although the socialist President «Nicholas Maduro said that this step will fix the situation of the faltering economy, but now we see that the situation has become worse, with inflation in the country to nearly one million percent, for example, the price of a package of parsley in Venezuela about one million bolivars.
Thus, in the case of Iran, it is expected that this step will be only "cosmetic", especially since so far no clear economic plan has been announced in the context of the introduction of currency change, which calls for the expectation that the Iranian economy will continue to falter in the pace for a period Long to come, because of three obvious reasons.
First, the continuation of the US economic sanctions on Iran, which means tightening the screws on all Iran's attempts to expand economic, as well as that US President «Donald Trump» is not only trying to try to "claw claws", but "de-clawing" Iran, so it is expected Iran may have a chance to get rid of President Trump with the upcoming US presidential election in 2020, but it seems to be a slim chance because even Now a strong challenger from the Democratic Party has not appeared The Tali seemsbe «Trump» will stay for another four years.
Second, is the lack of independence of the Central Bank of Iran, so that it can do its work in achieving the economic stability of the state, and find economic reforms for the troubled banking sector. »Towards achieving the economic stability of the country by targeting the indicators of inflation, interest rates and exchange rate.
Third: The permanent stance by the Iranian leadership to create more crises in the region and the world, where Iran behaves in the sense of «loser» or loser who has nothing else to lose, To the detention of oil tankers to announce the lifting of the ceiling of uranium enrichment, all these crises create further economic blockade on them, as well as this is losing its trading partners.
Therefore, in the end, and in light of the above indicators, it can be said that the Iranian economy will not emerge from the bottleneck in the near term. It is shrinking (growing at a negative rate) to 3.6% at the end of 2018, then 4.5% at the beginning of 2019.The Fund expects the Iranian economy to continue to grow at a negative rate of 6% by the end of 2019.
https://www.albawabhnews.com/3690479
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claud39- Elite Member
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Join date : 2018-11-04
This is the history of the currency in Iran .. Why Tehran will delete the zeros from its banknotes?
[size=36]This is the history of the currency in Iran .. Why Tehran will delete the zeros from its banknotes?[/size]
17/08/2019
Follow - up - News balances
decades ago the governments of many countries have benefited from the benefits of the deletion of zeros from their local currencies, to facilitate use among people and reduce printing costs and control inflation and strengthen the local currency position among nations.
After rounds of negotiations over the years, the Iranian government approved a proposal by the central bank in January this year to remove the four zeros from the local currency, and the proposal was submitted to the Iranian parliament for approval.
Since the reign of the Achaemenids to date, more than 50 different currency types have been used in Iran, such as the Achaemenid Drake, the Dirham, the Sassanian dinar, the Shah, the Abbasid Safavid, the Toman, and the Qajar Koran to the current rial and dinar.
According to the first article of the banking monetary law adopted since 1972 in Iran, the official currency of the country is the Iranian rial, which was replaced by the Toman in the Pahlavi state in 1929 and continued to this day, where one riyal consists of one hundred dinars.
Although the name of the currency has changed to the riyal, the Iranian people still call their currency "Toman" in their purchasing business. The use of the riyal name is limited to banks and official institutions in Iran.
But according to the central bank's plan, the toman would become the official currency of Iran as an alternative to the rial. Four zeros will be deleted from the official currency.
Toman Original currency
The Toman will become the original currency of Iran, while the riyal remains the sub-currency, each 100 riyals constitute one toman.
The Toman will become the original currency of Iran, while the riyal remains the sub-currency, each 100 riyals constitute one toman.
For its part, the Central Bank announced the start of the process of collecting used money and exchange of new money within 24 months after the approval of Parliament.
"The value of the Iranian national currency has fallen by 3,500 times since 1971, and the exchange rate of the Iranian riyal against foreign currencies (the dollar) is 0.000008 and we need to fix the appearance of the currency and improve the riyal relationship," Central Bank of Iran (NBI) President Nasser Hemmati said in August. In dollars. "
He added that there are currently seven billion banknotes in the country, but the number will fall to three billion after the exchange of the riyal Altoman. This will facilitate trade and exchange between people and reduce the cost of printing money.
Divergent views
Opinions about the new plan were divided between loyal and opposition until the issue became controversial in Iran, and in the opinion of opponents, the government's pursuit in this regard is a waste of time and effort only.
In their view, it is more feasible at this stage for the government to focus on reforming the country's economic system and reducing inflation, which has reached 40%, while the economic growth rate is 5%.
Similar experience in other countries shows that monetary change only achieves its objectives and desired results when economic stability is achieved. Otherwise, this would constitute a heavy financial burden on the economy and the government, especially since the government is currently suffering from budget deficits, economic instability, high inflation and economic sanctions. .
On the other hand, supporters believe that the most important features of the plan is to give the currency its real value.
The plan is characterized by reducing the size of banknotes and facilitate transactions and reduce the storage and maintenance space and save the banknotes better, and facilitate the process of carrying and transport, and reduce the psychological effects of inflation, and raise the currency between countries, and save time for people and banks at the same time, according to supporters .
Inflation and other things
says Ali religious Turkmen professor at Tehran University and a faculty member at the Institute for Studies and Research business in his speech to the island "took this decision as a result of continuous inflation years now , which contributed zooms in numbers."
says Ali religious Turkmen professor at Tehran University and a faculty member at the Institute for Studies and Research business in his speech to the island "took this decision as a result of continuous inflation years now , which contributed zooms in numbers."
He pointed out that the key elements of currency stability and control of inflation are not achieved when changing the currency and deleting zeros, Turkey has a similar experience in the deletion of six zeros from its currency in 2005, but the plan would not have benefited the Turkish economy without Turkey's involvement in the European market and attract head Foreign money and the correct management of the economy.
He also said that this plan will not affect the purchasing power or people's property, and that the deletion of zeros will include money and goods at the same time, for example, the price of bread will become Tomanin instead of 20,000 riyals.
Similarly, for foreign trade or foreign exchange transactions, prices will remain the same, and the purchasing power of foreign currencies will remain unchanged with the new toman, he said.
In this sense, changing the currency and deleting its zeros is a double-edged sword for the Iranian economy. The success of the plan depends on the government's parallel economic reforms, to safely pass the thorny economic entitlement, or else it will plunge into inflation again if it continues to deal with the economy with the old system and the same mentality adopted four decades ago, observers say.
https://www.mawazin.net/Details.aspx?jimare=60352
claud39- Elite Member
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Join date : 2018-11-04
Central Bank Governor: National currency value rose 40%
[size=30]Central Bank Governor: National currency value rose 40%[/size]
23/08/2019
The value of Iran's national currency has risen by 40% in the past eight months, the country's central bank governor said.
This came during an interview conducted by "NBC", with the Governor of the Central Bank of Iran, who explained the latest economic developments in the country and Iranian oil exports and the economic conditions of the country after the US embargo.
On Trump's claim that he would zero in on Iranian oil exports, Hemmati said, "We are continuing our oil exports and are on the rise and are moving forward using unconventional methods."
In response to a question about the volume of Iranian oil exports, he refused to disclose the figure in light of the fact that Iran is now in an economic war with the United States and it is not correct to disclose such information to a government facing us. Planned America to reach its goal.
He pointed out that the US embargo mainly targets the poor and middle segments, while the US administration has said it wants to overthrow the state where the embargo led to an inflationary shock that mainly affected the poor and low-income classes.
http://alahadnews.net/index.php/permalink/173965.html
claud39- Elite Member
- Posts : 18423
Join date : 2018-11-04
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