Why does Rouhani suddenly want to 'rename' Iran’s currency?
The Hassan Rouhani administration’s push for currency reform is being met with criticism as economists say the Iranian economy is not yet ready to handle the potential dangers of a redenomination.
The Iranian government’s passing of a bill on Dec. 7 to change the national currency unit from the rial to the toman — equivalent to 10 rials — has triggered charges that the administration had not thoroughly studied the measure. The bill needs to be ratified by parliament and then approved by the Guardian Council to go into effect.
Despite the government’s insistence that the move was only a “name change,” a majority of economists in Tehran argue that the change to the national currency is considered redenomination, for which the Iranian economy is not yet ready.
Conservative news site Tabnak argued Dec. 8 that to be effective, the proposed currency reform must be combined with tight fiscal discipline and a contractionary policy for the coming Iranian fiscal year (beginning March 21, 2017) — none of which seems to have been considered in the government’s proposed budget bill. The publication further warned that curbing inflation, which has been the major target of monetary policy in the past three years, will not be enough for the proposed reform to maintain a positive impact.
The Central Bank of Iran, however, has stated that the effort to remove one should not be confused with redenomination, a process of eliminating several zeros from the national currency.
