Iran’s Fiat, Rial, Becomes Another Victim of Hyperinflation As Govt Releases ‘Toman’
Iran’s national fiat, Rial, has become the latest victim of hyperinflation due to constant trade sanctions from the United States even in times of the pandemic. Now the Iranian government is looking for an alternative to replace Rial in the coming years.
In a report published in a local daily on 4th May, the Iranian parliament has passed a bill titled ‘Reforming Monetary and Banking Law’ which would see the country move from their national fiat rial to the new alternative called toman in the next two years. Each toman is valued at 10.000 rials.
Hyperinflation has wreaked havoc on the economies of many countries in the past, especially those who are not an ally to the United States.
Just a couple of weeks back, Libya saw the value of its national fiat fall by 50% causing a series of protests and the riot-like situation on streets where the citizens were seen attacking the central bank.
Venezuela has become a default example of how hyperinflation can bring even a wealthy country to its knees, and as of today, their national fiat bolivar is not even worth the paper they are printed on.
Iran, on the other hand, has been mostly faced the wrath of the US sanctions which prohibit them to make trades in the international trade market.
Even during these conditions where a virus outbreak has ruined the economies of even developed nations, many thought these sanctions would be lifted on humanitarian grounds, however, that did not happen. In 2018 the official exchange rate for 1 US dollar was set at 42,000 rials and it has continued at the same rate even today.
However, bark markets are seeing exchange rates as high as 156,000 rials due to the ongoing economic crisis created by the sanctions and ongoing pandemic.
LocalBitcoins Selling BTC at $35,000 as per Local Exchange Rates
While BTC is trading under $9k on all of the foreign crypto exchanges, the inflation has skyrocketed the local value of BTC at around $35,000. 1 BTC on LocalBitcoins is available at 1,445,658,900 rials which when converted to USD comes around $34,500.
The new alternative Toman is set to take a couple of zeroes from its inflated currency but, it won’t really change the overall proposition of Rial.
Iran has been also keenly following the crypto space in hopes of regulating it and utilizing it to access the international trade markets. Last year, the country also regulated mining given it has an abundant supply of clean energy and many are hopeful that they would also regulate the use of cryptocurrencies soon.
Decentralized Currency Can Help Countries Overcome Hyperinflation and Trade Sanctions
The recent condition of Iran, Libya, Venezuela and many other nations highlights the flaws of fiat systems and how the monopoly of one currency can ruin several nations.
These issues can be easily overcome with the help of decentralized currency like Bitcoin whose value is not controlled by one particular organization, and since there is only a finite number of these digital assets the chances of hyperinflation is also near impossible.
Iran was discussing Central Bank Issued Digital Currencies (CBDCs) to as an alternative to its existing fiat system, however, the present situation has forced it to look for an immediate alternative at present in the form of toman.