Money, Money, Money…

Money matters a great deal in Iran.

More than you might imagine if, like me, you often lie in cushy western places where the cash in your hand can easily be taken for granted. People in Iran have to face vastly more change and pressure on their money than most people in most places. The currency is hit hard by international sanctions, quite mad inflation has bitten (almost) everyone but especially the poor and the middle class, and doings things we take for granted such as buying a book on Amazon, or a song on iTunes, is impossible for Iranians due to those same sanctions.

Sellers of almost anything imported in Iran have to either resort to Hawala transfers (a system of ‘you pay me, and my friend will pay your friend in Zurich’, which, as you can imagine, takes a lot of trust), or lugging bags of hard currency around the world which, as you can probably also imagine, raises the ire of most national police/Customs services for infringing cash transaction reporting regimes.

So, money is a bit of a problem.

It is also, for foreigners, a bit tricky to get a handle on at first. It takes a few weeks with any new currency, of course, but the Rial tends to be a bit harder to fathom at first thanks to some archaic references.

Maybe the best way to describe the system is to point out that the official currency is the Iranian Rial (IRR). By the way, a little known fact, the Rial was, as at the start of 2013, the world’s LEAST valued currency – which really takes some doing, as you can imagine, competing with the likes of Zimbabwe and the Congo.

Anyways, the Rial, is a bit like the dollar for Iran, but in practical terms because of its very low value, more like the cent. It is the most basic unit of legal tender in Iran. Spending 1000 of them is almost impossible; its value measured more for how well it encompasses  your old chewing gum.

As another aside, and another little known fact, the name derives from the Spanish real, which was for several centuries, the currency in Spain. Why? Sorry, my genius has limits, I have no idea why this is so. Anyone can tell me, please drop me a line.

For the visitor, or the new arrival, where it gets confusing is that people don’t talk about Rials. Only foreigners do. Locals talk about toman which, by the way, used to be a formal currency name for Iran. But everything, or rather, most things, are priced in Rials when you take a gander at a price label (if you know your digits). But when you talk prices, it is the toman that rules.

It so happens that despite being used everyday, the toman is no longer an official unit of Iranian currency. However, it used to be 10,000 dinars in the Ilkhanate Dynasty – which was actually a Mongolian House, not a Persian one, from when the Mongols ruled this part of the world. So, yes, it’s a load of old cobblers, dating to the 13th century to be precise. Why toman is still used is a bit of a mystery to a foreign devil like me. But, perhaps, just sometimes, ‘why?’ is an unimportant question.

Anyway, one toman is ten Rial. So, clearly, the easiest way to do things is read the figure in Rials, drop a zero, and this is your toman figure. Until you go to the checkout when all the talk is 3 zeros less than you figured. This is why: 500,000 Rials, for example, is the same as 50,000 tomans, which is expressed variously as 50, or 50,000. So, it is essential when talking with people to quite constantly clarify when they say 50,000, do they mean 500,000 Rial? I often just flick up a note and raise my eyebrows. If they take it, it was enough.

By the way, this is how the Rial looks (100,000 of them):


Exchange rates

With international sanctions, and the closing off of the Iranian economy from much of the world, the currency has come under enormous pressure and has been devalued quite seriously against, for example, the US dollar. The Rial has been on a VERY tough ride.

It was slowly losing its value from 2003 (when a dollar got you about 8000 Rial) right up to 2011 (when a dollar got you 10,800 Rial), but then it really took a nosedive.

In January 2012, when new, tougher international sanctions were announced, the Rial lost 50% of its value in a day. Poor Iranians just had their monthly wage obliterated.

By September of the same year, the Rial had dropped to 26,500 Rial to the dollar. By early October 2012, the poor, haemorrhaging Rial had plunged even more dramatically to 38,500 Rials per USD. In the 12 months leading up to the last Presidential Election, won by President Rouhani, the Rial lots more than half its value.

It has come back a bit lately, rebounding around 20%. Last week, I changed dollars (at an official outlet, not black market) for 30,000 Rial each. One presumes confidence in the President’s ability to see the end of sanctions will see the currency improve as long as the omens remain positive. Some more bad news, however, and it will sink again like a concrete hat.

A friend of mine in business for himself in Iran told me 2012 was such a terrible year for his business (import), because of this currency fluctuation. He recounted to me how each day he called his broker and asked what the rate was to the dollar, and the broker replied, “Depends, do you want the rate now…. (three second pause) … or now?” J

Street Value

So, what does the Rial buy you? How much are things?

As I said, inflation has bitten badly. You will continually be forking out large wads of currency to buy anything. I got some photos printed the other day, professionally, and I had to fork out 9.9 million Rial. or about 300 USD. Grocery shopping for things like milk and bread, or fruit and veg, and you don’t come home with more than two plastic bags of things for 2-3 million Rial. It seriously runs out of your hands for the simplest things. Doing anything, costs you millions. Your first day in Tehran, change a few bucks and you are a millionaire. But don’t worry, it doesn’t feel very satisfying for very long to be a millionaire when that is what you spend on fruit and veg the same day.


So, with everyone talking millions, the idea comes that there might just be a few to many zeros these days.

There is, and has been for a long time, talk of redenomination (for the layperson, this means dropping a handful of zeros). The issue has re-emerged and been under discussion, as a result of issuance of larger banknotes over the last 10 years. At present the largest banknote in most common use is 500,000 Rials. People talk about a 1,000,000 Rial note, but I have yet to see it. The 500,000 Rial note buys you two and a half pizzas. Or one packet of Lavazza ground coffee.

It is not a simple matter though, apparently, to lop zeros from your currency. Opponents of redenomination in Iran cite more inflation resulting from psychological effects, and an increased ‘velocity of money’ (not the same, so a banker-friend tells me, as the speed at which money flies out the window when tied to a rock, but rather the number of times a Rial is spent to buy goods and services per unit of time .

In 2008, an official at the Central Bank of Iran was reported to have said the bank planned to slash four zeros off the Rial and rename it the toman. He backed this up by then printing two new travellers cheques, which now work precisely as banknotes, and these are our 500K and 1m Rial notes. They have the figures “50” and “100” written on their top right hand corners, respectively, which is seen as the first step toward a new currency, which hearkens back to the earlier comment I made about how 500,000 Rial is 50,000 toman, and also called just ‘50’.

The debate, and plans, continue. There is no clear sign of any zero-lopping anytime soon. Out of interest, one source has it that a website to poll the public on the redenomination plan was launched on 21 July 2011; the public was allowed to vote on how many zeros to cut and what the new currency’s name should be. Preliminary results indicate that four zeros will be cut (in line with the government’s recommendation) and that the name will be changed to the Iranian Parsi.

Thanks for the pizza, that will be 3 million Rial. Oh, you mean 30? No 30,000. Great, so how many Parsi was that?


One thought on “Money, Money, Money…

  1. Hi there, I know this is an old post, but in case you’re still curious, the Real in Spain was called the Real because Real means “Royal” in Spanish. For football lovers, that’s also why Real Madrid is called Real Madrid (much as I prefer the idea of it being to distinguish them from some other football team called “Pseudo Madrid” )


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