Iranian Central Bank officials are denying that the government is considering introducing a large-denomination bill into its circulation.

As the country’s currency, the rial (IRR), continues to depreciate, reports surfaced suggesting the government may bring in a 5 million rial banknote, approximately valued at $7.

Valued at 2 million Rials, the country’s highest banknote in circulation, is barely sufficient to purchase goods worth slightly over three dollars.

For years, inflation and currency fluctuations have eroded the purchasing power of the Rial when compared to other major currencies.

The rial has undergone dramatic devaluation over the decades. Before the 1979 Islamic Revolution, for instance, one US dollar could buy 70 rials.

By early 2018, this surged to about 40,000, and it has since skyrocketed to 670,000.

This depreciation accelerated following the US exit of the nuclear deal in May 2018 and the reimposition of economic sanctions, including on oil exports and international banking activity.

As of August, the country’s monetary base has grown at a rate of 41%, resulting in the government printing about $460 million monthly.

Since taking office in 2021, President Ebrahim Raisi has increased the growth of the monetary base by about 10%.

The monetary base refers to the amount of money in circulation plus the reserves by the Central Bank. Its expansion can lead to inflation.

The introduction of larger banknotes would have social implications, particularly for foreigners exchanging money in Iran who often receive large quantities of rial banknotes for relatively small amounts in dollars or euros, which can be inconvenient or cumbersome to manage.