Iran’s monetary structure remains one of the most interesting topics for discussion because of the referencing system of two forms of currency, which can confuse even the most experienced analysts. While the Iranian Toman (IRT) and Iranian Rial (IRR) may be used somewhat synonymously in most routine business, they are, in fact, different. This oddity has historical, economic, and social connotations, which makes it a very important part of the Iranian economy.
In this exploration, we will explore the differences between the Iranian Rial and the Toman while highlighting their history, roles, and interaction in the present economy. At the end of this article, the reader will gain a wealth of knowledge about the currencies and their importance to the Iranian economy and how and why the two currencies exist in their unique situation today.
Understanding the Iranian Rial (IRR)

1. What Is the Iranian Rial?
   The Iranian Rial (IRR) is the national currency that is applicable and preferred by Iran’s government. It is divided into a hundred dinars. However, the utility of dinars is limited because of the high inflation rates in Iran. The Rial had its roots in 1798 when it came into circulation, replacing the Rial was a currency known as the qiran. It has been subjected to different changes due to the sanctions imposed, political instabilities, and economic crises.
   They also showed that there has been a constant reduction in the value of the Rial. During most of the twentieth century, the Iranian economy kept its value stable with other key world currencies; however, since the 1979 Islamic revolution and the onset of sanctions, it has been a very different story. As a result, Rial has drastically experienced a reduction in the value of purchase. Today, it is one of the most non-significant currencies globally because one Dollar can buy tens of thousands of rials.
2. How Is the Rial Used?
   It is still used for payment of wages and other official business, government business, and business in general. However, because of the devaluation of the local currency, the value of the physical currency being in circulation has highly eroded and is thus inconvenient as a medium of exchange. As such, the people of Iran have started substituting the Toman, an informal unit of Iranian currency equal to 10 rials. This shift means a lack of trust in the Rial’s stability and further distance from meaning with the practical effects of shirt supply and erosion through a disparate number of forces Iranians have that have no official currency affiliation.
3. The Role of the Rial in Iran’s Economy
   Despite efforts to stabilize the value of rials, which is one of the most important components of the Iranian economy, this currency has significant problems. While the Iran government still uses it in government accounting, foreign trade and in payments for essential services as it does in international trade as the Iranian central bank uses it as a reference point for different foreign currencies. Regrettably, this policy has still not caught up with rising inflation rates and more rigid international sanctions. Therefore, the essential utility of the Rial for fiscal transactions in the country has decreased considerably.
   The continuous ire of the currency, which has occurred for many years, affects other aspects of the economy since it makes Iran’s currency an unreliable store of value. Currently, lessons have been learnt due to high inflation rates, which threaten the stability of the Rial and increase international isolation. Since people’s purchasing power is eroding, long-term saving strategies aren’t possible; thus, Iranians are disillusioned with the Rial. They now use other forms of money or other measures such as Toman to save money and other general business transactions. Its currency has been devalued constantly, and its devaluation has had far-reaching impacts on Iran’s internal economy and participation in the world market.
   Understanding the Iranian Toman (IRT)
4. What Is the Iranian Toman?
   The Iranian Toman is an unofficial currency used In Iran alongside the official Iranian Rial. One Toman is equivalent to ten thousand Rials. This unit of currency with its roots in Safavid time has over the years changed from being quite a worthwhile sum of money to an appreciable type of Rial that was used as the form of currency in the purchase of most commodities due to inflation and the creation of other units of this money.
5. How Is the Toman Used?
   In current practice, Iranians prefer to use Toman instead of Rial in daily economic activities. This covers all purchasing of goods and services, from simple agreements to contracts. Even though Toman is not legal tender, it is more convenient for Iranians because they do not have to bother with the lower-value coins of the Rial.
   For instance, if the product is priced at 10,000 Tomans, its actual price is 100,000 rials, as it is much easier to work with Tomans. This has the effect of minimizing numerical operations involving very large numbers, which are instituted in daily business transactions, making it easier for people to transact business.
6. The Role of the Toman in Iran’s Economy
   Officially the Toman is not used in Iran, but it has circulated in this country and has been an important currency in the Iranian economy, particularly in the black market. The enormous circulation, lack of face value, and other reasons make the Rial useless for most citizens; therefore, the Toman is more convenient and popular. However, as previously discussed, there will be a problem associated with using the Toman for these reasons because it may complicate things for outside entities or for those who are not familiar with the dual currency systems.
7. Why the Toman is Still in Use
   The persistence of the Toman can be attributed to several factors:
   Cultural Familiarity: It is unfortunate that many Iranians have grown up with the Toman, and thus most of them are familiar with it. As the official currency of Iran converts to the Rial, meanwhile, the toman currency is still more convenient and easy to use.
   Avoiding High Inflation: As the inflation rate is still high and the Rial outperforms almost every month, using Toman in daily life helps to avoid using large-denomination banknotes. It makes boring and normal purchases convenient and gives people no time to think about how those large numbers are on the price tags.
   The Difference Between the Iranian Rial and Iranian Toman
8. Official vs. Informal Currency
   The principal difference between the Rial and the Toman is only that the Rial is a recognized currency of Iran, whereas the Toman is regarded as an unofficial type of currency. The formal and official exchange rates are transacted in Rial, and the more inflow exchange rate is transacted in Toman, although government transactions employ Rial.
9. Nominal Value
   It is also important to note that one Toman is equal to 10 rials, as was said earlier. This difference in value raises questions, especially for those in the grey areas when it comes to Iran’s currency. For instance, when a person asks you to pay 100,000 Tomans, you should know that this equals 1,000,000 rials. Because of this divergence, outsiders still find it difficult to compute the worth of Iran’s prices and wages.
10. Usage in Transactions
    In their daily activities, people of Iran prefer to use Tomans as a medium of exchange most of the time. However, Tomans are used more frequently than rials to present prices in Iran. One of these is because the Rial has relatively devalued over the period using the unit in the price could lead to a very large numeral. The Toman is 10 times the value of the Rial; it is just a more convenient and easily usable form of money.
11. Currency Psychological Impact
    So for Iranians, using the Toman diminishes the psychological feeling of uncomfortable dealing with figures as low as the Rial. Since the Rial has lost a great deal of its value, using it on a regular basis, with many zeros adopted to some prices, discouraged people and made them feel insecure. Referring to Tomans also contributes to forming some kind of protection, which is why the price looks more moderate.
    The Evolution of the Rial and Toman
12. The Transition from Toman to Rial
    Iran has had a lot of currency in its past, but the most famous one and one that was largely in use in the pre-modern period was the Toman. However, in 1932 the country replaced it with the Rial under the Pahlavi dynasty of Iran’s monarchy. The Rial was established in 1932 by devaluing the Toman at a rate of 1 toman = 10 rials although the latter is today used in Iran only as a small change.
    Since then, the Rial has achieved the definition of the Iranian currency in the minds of the government, international financial organizations, and legal bodies. Nonetheless, due to practicality, the Toman staved off the Iranian field as inflation and economic unrest advanced.
13. Modern-Day Confusion
    Today, the dual-currency system creates misunderstandings for the Iranian people and foreigners as well. Since the Rial is used in government and legal issues and the Toman is used by common people, there are two foreign exchange rates. This situation continuously changes the position of currency as well as its value in international markets regarding the Rial or Toman.
    The Impact of Inflation on the Rial and Toman
14. Rial Devaluation and Inflationary Pressures
    The Iranian currency, the Iranian Rial, has been greatly devalued in recent years mainly because of inflation, irresponsible economic policies, and sanctions. The Rial’s purchasing power has declined tremendously because it has depreciated notably against other leading world currencies and raised the price of many imports.
    In response, the Iranian population has persisted with using the currency unit referred to as the Toman for daily business transactions. Although the value of the Rial has deflated, the Toman remains easier to comprehend as a medium of exchange.
15. Currency Substitution: Toman as a Safe Haven
    Under the current condition of a relatively high inflation rate, excluding the effects of foreign exchange restrictions, the Toman has assumed more or less the role of a safe haven for the Iranian people. Due to sustaining a relatively more stable value in comparison to inflation, the Toman is preferred for making transactions with big amounts. This process of currency substitution happens in many inflations where individuals change the legal tender for others to protect value.
    The Future of the Rial and Toman
    Although the Iranian Rial remains Iran’s official currency, there is still ambiguity about the future of the Toman. There are some analysts’ opinions that one day Iran may go through a process of monetary redenomination, the process that will see the elimination of Toman as Iran’s unit of money and the replacement of Toman with a new unit of money. However, since the Toman has a colourful history in the Iranian culture and it is still in use in the Iranian economy, the paper expects the Toman to exist in the ranian economy for some time.
    Conclusion
    The Iranian Rial and Iranian Toman are two currencies, and the relationship between them is not very clear. Nevertheless, they are linked with history, economic issues, and inflation. Despite that the Rial serves as the country’s official currency, both Rial and Toman are considerably used in Iranian society because of the latter’s usage conventions and greater purchasing power.
    Regarding Iran’s money system, one should distinguish between these two units and know the reasons for the establishment of the new Rial. Being well informed about the Rial, Tomans, and their rates may also offer a lot of information regarding Iran’s economy, trends in inflation, and perhaps investment opportunities.