Iranian Rial (IRR)

Iranian Rial (IRR)

The Iranian rial (IRR) is the official currency of the Islamic Republic of Iran. Named after the Spanish real, the rial was first introduced in 1798 and is issued by the Central Bank of the Islamic Republic of Iran. Its Arabic symbol is ﷼. Although the rial is subdivided into 100 dinars, dinars are effectively obsolete due to their negligible value.

Key takeaways

• The rial is Iran’s national currency and is issued by the Central Bank of Iran.
• Officially free-floating, the exchange rate has been subject to heavy government controls and has often stabilized around 42,000 IRR per USD since 2018.
• Economic sanctions, reliance on oil revenue, price controls and corruption have weakened the rial and limited its convertibility.
• Iranians commonly use the toman (1 toman = 10 rials) in everyday speech; there have been legislative moves to adopt the toman formally, but the rial remains official.

Brief history

• The rial first appeared in 1798, replaced by the qiran from 1825–1932, and reinstated in 1932.
• Its value fell significantly following the 1979 Islamic Revolution.
• Iran is a major OPEC member and depends heavily on oil revenues, which have been disrupted by sanctions and oil price swings.

Banknotes and coins

• Banknotes: 100, 200, 500, 1,000, 2,000, 5,000, 10,000, 20,000, 50,000 and 100,000 rials.
• Coins: 50, 100, 250, 500, 1,000, 2,000 and 5,000 rials.

Convertibility and exchange-rate behavior

• The rial is not freely traded on global foreign exchange markets in the same way as major convertible currencies. Government controls, sanctions and multiple exchange rates have historically limited its convertibility.
• Since the early 2000s the rial’s official exchange rate has fluctuated widely — historically reported between about 1,750 IRR/USD and as high as over 44,000 IRR/USD.
• To manage volatility and capital flows, Iran’s central bank applies controls and sometimes maintains a managed or dual exchange-rate system rather than allowing an entirely free float.

Why the rial is weak

Primary factors weakening the rial include:
* International economic sanctions that restrict trade, banking access and oil exports.
* Heavy reliance on oil income, making the economy vulnerable to price shocks and export limitations.
* Domestic economic policies such as price controls and subsidies that distort markets.
* Political instability and governance issues that discourage foreign investment.

Offshore transactions and non-deliverable forwards (NDFs)

Because the rial is effectively non-convertible for many international market participants, offshore counterparties often use financial instruments called non-deliverable forwards (NDFs). NDFs are short-term, cash-settled forward contracts where settlement occurs in a convertible currency (typically USD) rather than by exchanging physical rials, allowing parties to hedge or take positions without accessing onshore foreign-exchange markets.

Rial vs. toman

• The toman is a unit commonly used in Iran’s everyday pricing and conversation: 1 toman = 10 rials.
• Periodic proposals and parliamentary measures have aimed to redenominate the currency by replacing the rial with the toman (effectively removing zeros). As of now, the rial remains Iran’s official currency.

Practical notes

• The rial is used only in Iran.
• To obtain current exchange rates, use reputable currency converters or market quotes; be mindful that official, market and black-market rates can differ substantially due to controls and sanctions.

Conclusion

The Iranian rial remains a heavily managed and politically sensitive currency. Its value and convertibility are shaped more by geopolitical developments, sanctions and domestic economic policy than by typical market forces, which complicates international trade and financial interaction with Iran.