Iran has introduced a new 10 million rial banknote, the highest denomination in the country’s history, as authorities struggle to manage an inflation rate that is spiralling out of control amidst the ongoing war.
Commercial banks across Iran began circulating the new notes this week. Valued at approximately $7, the currency was met with long queues as citizens sought to withdraw cash over fears that automated teller machines (ATMs) would run dry, a situation that eventually occurred at many locations.
The new pink banknote features a vignette of the 9th-century Jameh Mosque of Yazd on the front, while the reverse side showcases the 2,500-year-old historic Bam Citadel. This note now surpasses the 5 million rial denomination that was only introduced in early February.
Currency supply and banking restrictions
The central bank of Iran stated that the new denomination was issued to ensure the public retains access to physical cash. However, the regulator maintained that electronic payment systems, including debit cards and mobile banking, should remain the primary mode of transactions.
Despite government assurances that the cash supply would remain unaffected by the war, many bank clients have reported severe limitations on withdrawals. One resident informed the Financial Times of waiting an hour only to be told the withdrawal limit was 10 million rials, though a higher amount was eventually granted after a protest.
The banking sector itself has become a direct target in the conflict. Major infrastructure in Iran, including financial institutions, has been hit by airstrikes involving Israel and the United States. Earlier this month, a building belonging to Bank Sepah, which serves both the military and the public, was struck by a missile.
Economic strain and social impact
The Iranian economy was already under significant pressure prior to the current conflict due to years of US-led sanctions, declining oil revenues, and entrenched corruption. These factors, combined with persistently high inflation, have led to a sharp and sustained devaluation of the rial.
In the months following the 12-day war in June last year, the currency lost an estimated 40 per cent of its value. This worsening economic environment contributed to the outbreak of mass protests in January.
The subsequent crackdown on those demonstrations resulted in a heavy humanitarian toll, with reports indicating that thousands were killed. As the conflict continues to impact business operations and infrastructure, the introduction of the new high-value note highlights the depth of the country’s current financial challenges.
