Iranian rial

Until 2002, Iran's exchange rate system was based on a multi-layered system, where state and para-state enterprises benefited from the "preferred or official rate" (1,750 rial for USD) while the private sector paid the "market rate" (8,000 rial for USD), hence creating an unequal competition environment. The "official rate" applied to oil and gas export receipts, imports of essential goods and services, and repayment of external debt. The "export rate", fixed at 3,000 rials per USD since May 1995, applied to all other trade transactions, but mainly to capital goods imports of public enterprises.[23]

In 1998, in order to ease pressure on exporters, the central bank introduced a currency certificate system allowing exporters to trade certificates for hard currency on the Tehran Stock Exchange, thus creating a floating value for the rial known as the "TSE rate" or "market rate". This method finally replaced the fixed "export rate" (IR3,000:US$1) in March 2000, and has since held steady at some IR8,500:US$1.

In March 2002, the multi-tiered system was replaced by a unified, market-driven exchange rate. In 2002 the "official rate" a/k/a "preferred rate" (IR1,752:US$1) was abolished, and the TSE rate became the basis for the new unified foreign-exchange regime.[43] Iran's Central Bank channels more than 90 per cent of hard currency into the local market (2012).[27]

In a move interpreted as aiming at unifying currency exchange rates, on September 24, 2012, the government launched a foreign exchange centre, that would provide importers of some basic goods with foreign exchanges, at a rate about 2% cheaper than the open market rate on a given day.[33][44] This project was canceled following the strong depreciation of the rial between 2012 and 2013 but was put on the agenda again in 2015 for use in the reunification of forex rates (planned for 2017) and the introduction of currency derivatives. through the Iran Mercantile Exchange.[45]

In addition to banks, exchange shops are also available for limited transactions. Exchange shops must operate under the licenses issued by Central Bank of Iran. Foreign currencies can be bought or sold at these exchange shops.

Exchange restriction arises from limitations on the transferability of rial profits from certain investments under the Foreign Investment Promotion and Protection Act and from limitations on other investment-related current international payments under this act.[46]

In 2010, the cases of multiple currency practices arose from the following:[46]

1. Budget subsidies for foreign exchange purchases in connection with payments of certain letters of credit opened prior to March 21, 2002, under the previous multiple exchange rate system (see above);
2. Obligations of entities that had received allocations of foreign exchange at subsidized "allocated rates" under the previous multiple exchange rate system to surrender unused allocations to the Central Bank of Iran at the allocation rate.

Until 2012, the dollar had different exchange rates, depending where you are buying your currency[47]

• Official Exchange Rate
• Free Trade Zone Exchange Rate
• Referential Exchange Rate
• Black Market Exchange Rate

In 2012, Bank Markazi classified a long list of goods into categories with priorities 1 through 10, leaving it to the parallel market to take of all other needs. Priorities 1 and 2 are food and medicine, receiving foreign exchange at the official rate of 12,260 rials per dollar, followed by other categories with lower priorities, which are mostly intermediate goods used in industrial production.[48]

Because of the current low value of rial, and that people rarely use the term, redenomination or change of currency has been proposed a number of times since the late 1980s. The issue has re-emerged and been under discussion, as a result of issuance of larger banknotes in 2003. Opponents of redenomination are wary of more inflation resulting from psychological effects, and increase in velocity of money leading to more instabilities in the economy of Iran.[49][50]

On April 12, 2007, the Economics Commission of the Parliament announced initiation of a statute in draft to change the currency, claiming redenominations had helped reduce inflation elsewhere, such as in Turkey.[51][52] In 2008, an official at the Central Bank of Iran said the bank plans to slash four zeros off the rial and rename it the toman.[53] The bank printed two new traveler's cheques, which function quite similar to a banknote, with values of 500,000 and 1,000,000 rials. However, 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.[53]

In 2010, President Mahmoud Ahmadinejad announced that Iran would remove three zeros (not the four that had been proposed) from its national currency as part of the economic reform plan.[54]

In April 2011, it was reported that the Central Bank is working on a six-month redenomination project to cut four zeros from the national currency and replace old bank notes with new ones, similar to the revaluation of the Turkish lira in 2005.[55][56][57][58]

A website to poll the public on the redenomination plan was launched July 21, 2011; the public was allowed to vote on how many zeroes to cut and what the new currency's name should be. Preliminary results indicate that four zeroes would be cut (in line with the government's recommendation) and that the name will be changed to Parsi.[59]

In 2016, the government announced its plan to end the official status of the rial, replacing it with the commonly used unit the toman (which represents 10 rials).[60]

In July 2019, the Iranian government approved a bill to change the national currency from the rial to the toman with one toman equalling 10,000 rials, a process which will reportedly cost $160 million.[61][62] This proposal was approved by the Iranian parliament in May 2020. The changeover is likely to be phased over a period of up to two years.[63]

It was reported in 2007 that a U.S. Central Intelligence Agency (CIA) plan had been authorized to manipulate the Iranian rial in order to destabilize the country, though the details and outcome of said plan are not known.[64] Iran reported arresting 20 "Forex manipulators" in 2012.[65]

In 2013, talking about the sanctions against Iran, US Senator Carl Levin said that "Iranian Rial banknotes are printed in Europe".[66]

A golden daric coin minted during the time of the ancient Persian Empire

During the late 18th and early 19th century, Silver coins were issued in denominations of ​¹⁄₈, ​¹⁄₄, ​¹⁄₂ and 1 rial.

The first coins of the second rial currency, introduced in 1932, were in denominations of 1, 2, 5, 10 and 25 dinars, ​¹⁄₂, 1, 2 and 5 rials, with the ​¹⁄₂ to 5 rials coins minted in silver. Gold coins denominated in pahlavi were also issued, initially valued at 100 rials. In 1944, the silver coinage was reduced in size, with the smallest silver coins being 1 rial pieces. Minting of all denominations below 25 dinars ended in this year. In 1945, silver 10 rials coins were introduced. In 1953, silver coins ceased to be minted, with the smallest denomination now 50 dinars. 20 rials coins were introduced in 1972.

After the Islamic Revolution, the coinage designs were changed to remove the Shah's effigy but the sizes and compositions were not immediately changed. 50 dinar coins were only minted in 1979 and 50 rial coins were introduced in 1980. In 1992, a new coinage was introduced with smaller 1, 5, 10 and 50 rial coins and new 100 rial pieces. 250 rial coins were introduced the following year. In 2004, the sizes of the 50, 100 and 250 rial coins were reduced and 500 rial coins were introduced. New, smaller types of 250 and 500 rials were introduced in 2009, along with the new denomination of 1000 rials. 2000 and 5000 rial coins were introduced in 2010.

Printing banknotes larger than 10,000 rials was first proposed in 1989, and in 1992 the central bank asked for government permission to print 20,000, 50,000 and 100,000 rial notes. This was not realized at that time, due to fears of inflation and counterfeiting.[49] The 10,000 rials note remained the highest valued banknote for more than 50 years until 2005, when a 20,000 rial banknote was introduced and subsequently a 50,000 rial banknote was introduced with the subject being the Iranian nuclear energy program. The note was issued March 12,.[100][101] The note features a quote by the prophet Mohammed, translated as: "Even if knowledge is at the Pleiades, the people from the land of Persia would attain it".[102] Banknotes currently in circulation are 100, 200, 500, 1000, 2000, 5000, 10,000, 20,000, 50,000 and 100,000 rials. After the death of Ruhollah Khomeini, his portraits were used on the obverse of 1000 rial banknotes and greater.

Currently the highest valued legal tender banknote issued by the central bank is 100,000 rials (about U.S. $2.38 on Apr. 13, 2018).[103][104] However 500,000 rial and 1,000,000 rial Iran Cheques circulate freely and are treated as cash.

The central bank used to allow major state banks to print their own banknotes known as "cash cheques". They were a form of bearer teller's-cheque with fixed amounts, printed in the form of official banknotes. Once they were acquired from banks, they could function like cash for a year. Two forms of these banknotes were available. One known as "Iran cheque" could be cashed in any financial institution, while the other could be cashed at the issuing bank. They were printed in denominations of 200,000, 500,000, 1,000,000, 2,000,000 and 5,000,000 rials.[105][106]

In 2008, CBI revoked this privilege from banks, and currently issues its own Iran Cheques in denominations of 500,000 and 1,000,000 rials.[107]