Impact of Rial outflow on foreign trade

Impact of Rial outflow on foreign trade

A former member of the Iranian Chamber of Commerce, while evaluating the conversion of the country’s currency from Rials to Tomans, said: “This measure can have a positive effect on exchanges and money movements, but will not have any effect on variables such as imports, exports or national income.”

In an interview with ISNA, Kazem Doust Hosseini said: “Removing the rial from the currency and determining the toman as the only currency will not theoretically make a difference for the economy.” He added: On the other hand, there are assets of the central bank, do not collapse and this amount of money does not increase, naturally the currency will not have an effect on economic issues. , Because according to the existing mentality, there is always the expectation that the rial will weaken every year due to inflation, so if the currency is large and large, if there is the same current inflation, its inflationary effects on the rial will have an impact. Negatives and weakens the currency. ‌

Hosseini’s friend stated: In this regard, it must be determined whether a zero is to be removed from the currency or a new currency will be defined. If a new currency is to be defined, there is no reason why it should be zero. For example, every 384 rials can be defined as a new “drake” or toman, but if the issue of elimination is zero, like what happened in Turkey and several other countries, it can affect the circulation of banknotes and exchanges and the movement of money.

A former member of the Iranian Chamber of Commerce added: When one toman equals 10 rials, it means that it increases 10 times. At one point, there was talk of removing four zeros from the currency, which, if that happened, would have far-reaching inflationary effects. It seems that since we have not experienced such an action, this omission should start with caution and with small numbers, ie one or two zeros.

He also said about the effect of this measure on imports and exports: removing the rial or removing one zero from the currency will not affect economic variables in the field of international trade such as exports and imports and is important only in moving money and keeping and storing money, but It can have no effect on variables such as national income, exports or imports.