Shamseddin Hosseini

Iran is gearing up to cut three or four zeros from it’s national currency, the rial, according to the minister of economy and treasury.

Shamseddin Hossein said the changes in the national currency have been confirmed, and it is now up to the Central Bank to decide on the details.

In the meantime, head of Iran’s Central Bank announced that it will remove four zeros from the currency in the next one to two years. Mahmoud Bahmani said: “This means that the new rial will be equivalent to the current 10 thousand rials which would make it equal to the dollar.”

Iranian authorities have said the change is aimed at reducing the volume of cash in circulation, easing transactions and the carrying of money, as well as controlling inflation. Some experts, however, have claimed that under the wrong conditions, the move could in fact cause inflation to surge.

The plan to remove zeros from the national currency has long been under review by the Ahmadinejad administration. Iranian economic and bank officials have said conditions are now ripe for the change, in view of the “success of the banking system in carrying out the cutting of government subsidies.”

The head of the Iranian Chamber of Commerce, Mohammad Nahavadian, said last week that inflation cannot be controlled unless “inappropriate use of oil revenues, evident budget deficit and inappropriate currency policies” are brought under control.