Skip to main content

Iran’s plan to get rid of the subsidized exchange rate

Iran's subsidized exchange rate has failed to prevent the downfall of the rial — and a move to do away with it could actually help the economy.

Iranian rials are displayed in Tehran on July 31, 2019.
Iranian rials are displayed in Tehran on July 31, 2019. The government in sanctions-hit Iran on Wednesday approved a plan to remove zeros from the rial and rename the currency — something its people have long been doing to simplify transactions.

There are signs that Iran will officially get rid of its official subsidized exchange rate — at 42,000 rial to one US dollar — by the end of the current Iranian year on March 20, 2022. If implemented correctly, the move could actually help the Iranian economy find a new balance, but the question is whether political and socioeconomic realities will allow the government to implement a sound approach to exchange rate policy. 

Iran currently uses three different exchange rates: the official subsidized rate, the market rate, and a rate controlled by the central bank available to importers and exporters of essential goods. The latter is known as the NIMA rate.

Subscribe for unlimited access

All news, events, memos, reports, and analysis, and access all 10 of our newsletters. Learn more

$14 monthly or $100 annually ($8.33/month)
OR

Continue reading this article for free

Access 1 free article per month when you sign up. Learn more.

By signing up, you agree to Al-Monitor’s Terms and Conditions and Privacy Policy. Already have an account? Log in

Related Topics