Historical Sketch

Persian statehood dates back to antiquity, culminating with the Achaemenid Empire in 6th century BC. After a long period of foreign domination, the Safavids re-established a Persian state in 1500. In 1786, the Qajar dynasty took power and kept it until 1921, when it got ousted in a military coup d'état by Reza Pahlavi, who then ascended the Persian throne and established the last dynasty, succeeded by his son in 1941. During World War II, Iran was de facto occupied by Allied troops which finally withdrew in 1946. In 1979, the monarchy was overthrown, and the Islamic Republic was proclaimed.

Monetary History Overview

Up to the mid-19th century, Iran's monetary situation had turned into disarray. From the 18th century onwards, payment transactions were dominated by debased gold and silver coins, plus a flood of local coppers. A first attempt at reforming the coinage failed in 1857. Twenty years later, a new coinage law was based on the Iranian Qeran in silver. The traditional golden Toman got also redefined having a nominal value of ten Qeran but was actually traded for bullion. The coinage exchange began in 1879 and the debased coins were withdrawn. In 1889, the London based Imperial Bank of Persia began operations and issued paper money under a concession of the imperial government. In 1925, the Qajar dynasty was overthrown by the Pahlavi. This triggered a series of modernizations in the administration. The switchover to the gold standard failed twice in 1930 and 1932 due to the World economic crisis. Hence, the Iranian Rial was introduced in 1932 with a peg to the Pound Sterling but not bound to gold. The state-owned National Bank (or Bank Melli) took over banknote issuance until the Central Bank of Iran took over in 1960. In 1936 and second time in 1942 during the Allied occupation in World War II, the Rial was devalued, in total by 54%. After the Second World War, the Rial repegged to the US Dollar. In 1957, a 57% devaluation was carried out, afterwards Dollar peg remained basically unchanged. The Rial did not follow the Dollar devaluations in the early 1970s, and in 1975 it repegged to IMF Special Drawing Rights (SDR) unit. The Islamic revolution of early 1979 and the subsequent political and economic isolation rendered the Iranian currency inconvertible. In 1992, the official rate was abolished and replaced by the floating central bank rate, which was then close to the market price, translating into a nominal 95% devaluation. Depreciation continued and periods of frozen or stable exchange rates were interrupted by massive devaluations, such as in 2002 and 2013. In 2018, the exchange policy was revised. The central bank rate got frozen, and its applicability restricted. Everyday payment transactions occur at the official market (bureau-de-change) rate that floats according to demand and supply. In 2020, a new currency law has been enacted to carry out a currency reform within two years. Four zeros are cut from the Rial and the Iranian Toman is to become the new national currency.

Iran joined the International Monetary Fund (IMF) on 29.12.1945 as a founding member.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources