The Iranian government is preparing to conduct large-scale economic reforms. In recent years, the government has been insisting on reforms aimed at strengthening the country's economy against the background of US sanctions adopted against this country.
“Now the Islamic Republic of Iran is experiencing a difficult time. Despite the fact that in the summer of 2015, an agreement on a nuclear program was signed between the Iranian government and the six countries, Trump announced his country's withdrawal from this deal. After that, the West, especially the USA, began to more intensively apply tough sanctions against Iran. Therefore, Iran’s economy is under pressure,” Political scientist Tofig Abbasov told CBC.
These sanctions also caused a rise in prices, a sharp change in the dollar against the national currency of Iran. For this reason, the Central Bank of Iran submitted its proposals to the government regarding the denomination. According to experts, the denomination will stabilize the situation on the financial markets. At the same time, they believe that the denomination will not create any difficulties for Iran in the implementation of foreign trade.
“There are no big risks for foreign relations, as well as trade with neighboring countries. This is due to the internal economic processes. Iran is one of the strongest states in the region. Although Western sanctions exert strong pressure on Iran, the country has created a flexible mechanism both in the domestic market and in the system of external relations, which is able to respond quickly to any problems,” Tofig Abbasov added.
The Central Bank of Iran has already proposed to remove 4 zeros from the national currency of the country - the rial. If approved, the "new" rial will be equivalent to 10 thousand "old." Now the dollar in the neighboring country is about 10 thousand rials. And after the denomination, this figure will be one to one, 1 dollar will be equal to 1 rial. Experts believe that this will not affect Azerbaijan in any way, since foreign trade operations with this country are carried out in international currency.
“Azerbaijan has strong economic ties with all its neighbors, except Armenia, and our country expands and strengthens these ties. The country is also expanding political ties. Relations between Azerbaijan and Iran are successful for both countries and their citizens. Holding the denomination will not create any risks for Iran’s external partners. And this step will in no way affect trade relations with both Azerbaijan and other countries,” Economic expert Aydin Huseynov told CBC.
Experts note that official Tehran and Baku adhere to a clear and pragmatic position in their mutual relations. There are strong and already traditional mutual economic relations between the two countries. Azerbaijan and Iran are jointly participating in major transport projects in the region. According to experts, the expected denomination in Iran will be calm and this process will not affect the economic situation in the region. Note that this will be the second denomination of the Iranian currency over the past three years.