Iran’s currency has been in the spotlight recently due to escalating geopolitical tensions and global economic policies. US President Donald Trump has once again taken decisive action by imposing tariffs of up to 25 percent on countries that continue to do business with Iran.
This policy has triggered various reactions, especially in Iran’s economy, including the depreciation of its national currency. In a recent report, Iran’s currency, the rial, was even mentioned to have touched its lowest level when converted to the euro. This reflects the heavy pressure on Iran’s economy due to sanctions and prolonged inflation.
Interestingly, if you visit traditional markets or stroll through shopping centers in Iran, the term “rial” is rarely heard in daily transaction conversations. Instead, locals are more accustomed to using the term “toman” when referring to prices of goods or services.
This phenomenon is closely related to the very high inflation rate. To simplify price references and avoid excessively large numbers, Iran has implemented an alternative counting system called the toman.
So, what is the official currency in Iran, and what are the fundamental differences between rial and toman that often confuse tourists and international economic observers? Here is a comprehensive overview compiled from various sources.
Iran has legally established the rial as its official currency. All banking activities, government documents, and price listings in modern shopping centers use the rial unit with the international code IRR.
Despite this, in everyday life, Iranians rarely mention the term “rial” when transacting. They are more accustomed to using the term “toman” in buying and selling conversations, both in traditional markets and small shops.
In practice, one toman has a much simpler value to mention. One toman is equivalent to 10,000 rials or can be understood as rials with four zeros cut off. This system makes it easier for people to state prices without having to use long strings of numbers, even though rial remains the official currency of the country.
Historically and legally, the rial is a valid currency printed on banknotes and used in all financial documents. However, due to ongoing inflation that pressures the rial’s exchange rate, the population chooses a practical way of simplifying the value through toman. The basic rule is simple: one toman is equal to ten old rials.
This means that if a merchant states the price of an item at 60,000 toman, the actual amount to be paid is 600,000 rials. This difference in pronunciation often confuses foreign tourists when they first visit Iran.
To end the long-standing confusion and simplify the national financial system, the Iranian government through the Central Bank of Iran began the redenomination policy in 2020. This process was then carried out more broadly and gradually from 2025 to 2026.
Through this policy, Iran officially changed its main currency unit from the rial to the new toman by removing four zeros. With this scheme, the old 10,000 rials are now equated to 1 new toman. The new currency is also divided into smaller denominations called qiran, where one toman consists of 100 qiran.
During the transition period, old banknotes remain valid and circulate alongside the new currency. Meanwhile, the newly issued banknotes display smaller denominations, accompanied by shadow numbers as indicators of the system change and gradual adjustment for the population.
Several factors contribute to the weakness of Iran’s currency, including long-standing international economic sanctions that continue to pressure the exchange rate’s stability. Geopolitical situations in the Middle East also significantly impact market confidence. Whenever political tensions rise, the rial’s value almost always comes under pressure and experiences further depreciation. Restrictions on oil exports and the closure of access to the global banking system cause the country’s foreign exchange revenue to continue dwindling. Domestically, the high inflation rate year after year erodes people’s purchasing power and weakens the currency’s position.
In conclusion, understanding the difference between rial and toman is crucial in grasping Iran’s unique financial system and the ongoing changes in its currency. As Iran transitions to a new monetary unit and gradually simplifies its financial structures, it aims to bring more clarity and efficiency to the market, both domestically and internationally.
