Iran Solves Problems while BTC Demand IncreasesJudy Rubio
Redenomination of Iran’s fiat currency is one of the most interesting economic issues of the region. The local institutions are finally going to remove the last four zeros. More than that, the freshly launched currency is going to be renamed – soon the population will trade in tomans, although right now the country uses rials.
Another fact the importance of which we cannot under evaluate is the events occurring in the crypto industry. The current market sees a great BTC demand.
The officials have decided that redenomination is necessary if they want to prevent hyperinflation. One will be able to buy one toman for 10 thousand rials.
The idea may be effective in trying to combat the negative consequences. This will help the nation to recover and that’s just another step that the officials need to take to start moving ahead. Several countries have done the same and improved their economy in a relatively short time. The list includes Zimbabwe. The same scheme worked in Venezuela.
Recently, the issues have proved to be serious – the restrictions that the USA imposed on Iran have influenced the entire issue. Only if the Parliament makes the very first drastic change will there be both foreign exchange shortage and outrageous liquidity crunch.
In most cases, in countries where crises are frequent and severe, people give preference to cryptocurrencies. That’s how they preserve wealth. In some instances, crypto becomes the only way in which the population can perform international transactions. According to the latest statistics, BTC’s price is growing, which makes it a great alternative to the fiat currency.
Hyperinflation and Effective Measures
The decisions made by Donald Trump two years ago put terrible pressure and affected many spheres. Since then, they have raised lots of issues and paralyzed a huge part of the entire economy. Unfortunately, the U.S. limitations won’t let the country grow, develop, and move ahead. In Iran, everything is mostly owned by the state.
The country used to export oil and it was quite successful. For many reasons, since 2017, the country's inflation has increased. Later on, in 2018, there were protests across the country – most of the population was dissatisfied with the rising prices. As a result, the rial lost most of its strength in over ten months.
The bank imposed several additional restrictions on Forex to prevent illegal foreign exchange and protect the population. Nima, another market functioning in the country, also experienced serious trouble. Experts have witnessed risks and dangers to the profitability of various ventures.
The worst part is that the government hasn’t yet unified the exchange rate. That’s what made participants move to the black market and start speculating and selling the fiat currency for crypto.
Plans to Redenominate the Rial
The pandemic has affected the country’s economy. Nowadays the rial keeps losing its value and strength. The crisis will keep on going up to 2021 and the authorities must take urgent measures to solve the problem. The new currency toman will replace the rial. Redenomination will become a starting point for the greater changes that will follow the scheme. Iran needs simplified transactions. However, not all are optimistic about the country’s future. Opponents claim that this cannot by any means help the country combat the crisis.
Denomination sometimes leads to inflation, which is another disadvantage we cannot ignore. There is no way back and the change will soon occur. Hopefully, the plan that the authorities have developed will help Iran struggle with the crisis, strengthen the economic situation, and help prevent inflation by applying several effective measures.
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