File photo shows Iranian rial notes.

The Iranian parliament has approved a bill to allow a major overhaul in the country’s currency rial.

Lawmakers in the Majlis on Monday approved articles and subarticles of the Bill to Reform the Country’s Monetary and Banking Act, a law which has dominated financial and economic exchanges in Iran since 1972.

The first article of the bill passed on Monday stipulates that Iran’s currency would be reversed to toman, a legal tender that was in use nearly 100 years ago in the country, and each toman will be equal to 10,000 rials.

An earlier version of the bill discussed in the committees of Majlis earlier this year had named the small unit for the new Iranian currency as Parseh.

However, the bill approved on Monday said each toman will be equal to 100 qirans, a reference to the currency of Iran between 1825 and 1932.

Article II of the bill on currency overhaul sets up a Period of Transition from rial to toman, saying the old and new currencies could simultaneously circulate in Iran for a maximum of two years.

It also said that forex rates under the new currency will depend on the amount of Iran’s currency reserves and other factors.

The exchange rate for toman against foreign currencies .... would be introduced by the Central Bank of Iran in the framework of the dominant foreign currency system and observing the country’s forex reserves and if necessary, the country’s commitments to the International Monetary Fund, said subartcile 1 of Article I of the bill.

The bill also requires the government to pass and announce laws for implementation of the currency overhaul scheme within the next three months.

Iranian authorities have rejected the notion that currency redenomination could offset the negative impacts of the American sanctions on the economy.

However, experts say the move could prove successful as part of a wider set of measures adopted by the government to improve economic indicators in the country and diversify the economy away from oil revenues.

SOURCE: PRESS TV