The curse of zeros and historical justifications… Why was the Iranian riyal classified as the weakest currency in the world?
8-6-2023
The curse of zeros and historical justifications... Why was the Iranian riyal classified as the weakest currency in the worldTehran – Despite the fact that the Iranian rial has recovered part of its value over the past four months, the American magazine “Forbes” classified it in its latest report as the weakest in the world against the US dollar.
Under the headline “The Iranian Rial is the Weakest Among the Currencies,” the Persian-speaking Iranian press paused in front of the “Forbes” magazine report, explaining that the report finds that the Iranian currency is equivalent to about 0.000024 US dollars; This means that you are able to buy 422 thousand and 733 riyals in green currency according to the official exchange rate, while the US dollar is equivalent to more than 485 thousand riyals in the parallel market at the present time.
The Forbes magazine report relies on the official exchange rate of the Iranian riyal, after nearly 4 months have passed since the Iranian-Saudi reconciliation and the constantly leaking news of indirect negotiations between Tehran and Washington to revive the nuclear agreement, which reflected positively on the recovery of the Iranian riyal.
The price of the US currency fell from 620,000 riyals last February to 490,000 Iranian riyals as of Friday evening on the black market.
Electoral promises
The Iranian press and tweeters on social media recalled the promises of the losing presidential candidate Mohsen Rezaei – who was appointed by President Ebrahim Raisi after his victory in the previous presidential elections as his deputy for economic affairs and then appointed him last month as head of the secretariat of the Supreme Council for Economic Coordination of the heads of the three authorities – that he would convert the Iranian riyal to the strongest currency in the region.
Officially, the Iranian government has not – so far – commented on the classification of the national currency as the cheapest among the world’s currencies, but the official media challenge such classifications and consider them unreliable because they are based on the number of zeros in the national currencies compared to the US dollar.
In a seemingly unified policy to respond to what Iranians are circulating on social media platforms and reformist newspapers, conservative media outlets, including the “Tasnim” news agency, which is close to the Revolutionary Guards, wrote that from 1940 onwards, different countries deleted a number of zeros from their currencies as a result of the escalating inflation and declining value, in While the Iranian currency remained the same, although its value exceeds many currencies of other countries.
Parliament Studies
On the other hand, the reformist “Tawad” newspaper responded to the reports that try to justify the fall in the value of the national currency, and wrote that “the latest reports of the Iranian Parliament Research Center reveal disastrous statistics about the decline in the value of the riyal against hard currencies over the past 100 years.”
According to the newspaper, the data of the Research Center of the Iranian Parliament show that the Iranian riyal in 1929 was equivalent to 0.366 grams of gold, and with the passage of time the price of a gram of gold increased from 3 riyals at that time to about 18 million riyals until March 2022; In other words, the value of the Iranian riyal has declined about 6 million times compared to gold and 16 thousand times compared to the US dollar.
The curse of the zeros
Meanwhile, the economist at the Institute of Contemporary Studies, Muhammad Sadiq al-Husseini, believes that the value of currencies is relative and must be compared with their value during certain periods to determine the improvement or decline in their purchasing value, adding that it was best for Forbes magazine to rely on the inflation index. To classify the value and strength of currencies.
In his interview with Al-Jazeera Net, Al-Husseini revealed that the inflation index in Iran has reached 250% since 2018 until today, and that inflation has always been more than 10% since the victory of the Iranian revolution in 1979, adding that if Tehran had deleted 4 zeros from its currency, the weaker Iranian riyal would not have arrived. Among the currencies in the last rating.
In order to get rid of the curse of the zeros of the Iranian riyal, the Central Bank of Iran proposed for the first time in 1993 to change the national currency to the toman (the toman is equal to 10 riyals) to delete 3 zeros from it; However, the proposal collided with opposition from some Iranian circles.
Currency change
and after former US President Donald Trump left the 2015 nuclear agreement between Iran and the six-party group (the United States, Britain, Germany, France, Russia and China) and reinstated sanctions on the Iranian economy, which led to a decline in the value of the riyal; The previous Iranian government approved the summer of 2019 to change the currency from the riyal to the toman, in preparation for deleting 4 zeros from it, and referred the project to Parliament, which approved it, but it collided again with the threshold of the Guardian Council.
The current government is working to provide clarifications to the Guardian Council for the final approval of the law, and the Central Bank of Iran has recently printed new money in which 4 zeros appear in a light color, in preparation for its final deletion in the coming stages.
And whether the deletion of zeros will lead to curbing inflation and the recovery of the currency, the Dean of the Faculty of Economics at Al-Khwarizmi University, Waheed Shaqaqi Shahri, published an article entitled “Inflation and the Deletion of Zeros from the National Currency” in the “Tijarat” newspaper, in which he concludes that curbing inflation needs to address the roots of the problem and that changing the currency Just changing the rial to the toman will not bring economic stability.
Reasons and solutions
The economist, Muhammad Sadiq al-Hassani, sees the persistent deficit in the public budget as a major reason behind the decline in the value of the national currency, stressing that the crisis of pension funds and the banking system constitute additional reasons for the decline in the value of the Iranian riyal, and that he does not hope for the Iranian currency to recover in the near future because there is no real plan. To solve these problems in the national economy.
Al-Husseini concluded that removing the specter of sanctions and returning frozen Iranian assets abroad would contribute to enhancing the value of the national currency, as well as curbing inflation and advancing the national economy to improve the living conditions of the citizen.
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Urgent…Iran: Iraq paid off part of its debts and its amounts were transferred to a third country
{Economic: Euphrates News} The Iranian Foreign Ministry announced that Iraq paid part of its debts to Iran for supplying gas to it.
“This money has been transferred to a third country,” an Iranian foreign ministry spokesman said at a press conference today, stressing that “technical talks will continue on that.”
Last month, the US State Department announced that part of Iran’s money in Iraqi banks would be transferred to Oman.
These funds will be held in Oman, but Iraqi restrictions on these funds will also apply in Oman and these funds can only be used for humanitarian and non-sanctioned purposes, and any transfer must be approved by the US Treasury Department," she said.
https://alforatnews.iq/news/إيران-العراق-سدد-جزءاً-من-ديونه-وتم-نقل-مبالغها%C2%A0الى-دولة-ثالثة