Iran has slashed four zeros from its currency as U.S. sanctions continue to grind away at the country’s economy.
According to reports, the Iranian government has approved a plan to condense the country’s currency, the rial, in a bid to tackle high inflation in the country. “The cabinet today agreed on a bill to eliminate four zeros from the currency and that ‘toman’ will be our national currency,” government spokesman Ali Rabiei told reporters in Tehran.
The effects of American sanctions on Iran are varied and complex. But the fall of the rial is a pretty good representation of the whole situation. The currency was trading at about 37,000 to the dollar three years ago, but it slumped to around 180,000 last year following President Trump’s decision to reinstate sanctions.
As the rial has deteriorated, the Iranian government has taken drastic measures to shore up the monetary situation. Policies like arresting unlicensed dealers and freezing the accounts of speculators were implemented. But reports that Iran has slashed four zeros from its currency shows these policies have reached a new place. This new step is essentially a form of giving in to the reality at hand. As spokesman Rabiei told the media, the decision “will make the national currency more effective,” adding that “it will be more in line with common practice in society…the rial is not used that much.”
Still, however, the Mullahs are refusing to face the music. What is very telling is that while all international outlets report that the “street” rate of the rial to the dollar floats around 120,000 to one, the official rate manipulated by the government is 42,000 to one. If this were in fact true, it wouldn’t be too bad for Iran. But the fact is, Iran is not interested in being honest with how isolated it has become economically. Iran’s really bad post-nuclear deal policy has lead it to threatening its remaining supporters in the West, and even breaking segments of the nuclear agreement in a bid at intimidation.