Iran Mulls Lopping Zeros off Currency

1ASDSA-21315.jpgTEHRAN (FNA)- Iran is considering lopping three to four zeros off its currency, a top official said Monday.

Iran’s Central Bank Governor Tahmasb Mazaheri told state-run radio that monetary experts are studying three options: Cutting three zeros off the rial, cutting four zeros, or boosting each rial’s value to one-hundredth of a gram of gold, or about 2,500 rials at current rates.

“We are studying all these three options,” Mazaheri said on state-run radio.

The currency proposals are seen as an effort by the central bank to reassert control over the country’s monetary supply.

The central bank’s vice president, Hossein Ghazavi, had told several newspapers earlier this week that a special committee had already been set up to study the proposed currency reforms.

The Iranian rial is now traded at 9,600 rials to one US dollar. In June, Iran’s government put the inflation rate at 26 percent.

Mazaheri noted that the use of coins in Iran has become irrelevant because of the rial’s low value. “If anybody wants to spend coins, he or she has to carry a kilogram of coins (to purchase food),” he said.

Mazaheri set no date for the currency reform but said the study would take at least a year before the bank could come up with a clear proposal. Any currency reform plan would need parliament’s approval.

In recent weeks, Iran has issued higher-denomination notes to try to ease transactions, which can be complicated and time-consuming with smaller-denominated bills. The central bank issued 500,000 rial and one million rial notes that carry the figures 50 and 100 on their backs, prompting speculation that the rial might lose four zeros.

Mohammad Tabibian, an Iranian economist, said bringing discipline to monetary policies is the only true solution.

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