The Iranian Toman is an integral part of Iran’s economic landscape and daily life. Despite the global dominance of the US dollar and the euro, the Toman remains the primary unit of currency used by Iranians. While it is not officially recognized by the Iranian government in international trade or accounting, the Toman has continued to play a central role in domestic transactions for everyday goods and services. In this article, we will explore the history, value, and significance of the Toman, how it functions in Iran’s economy, and its implications for local consumers and businesses.

A Brief History of the Toman

The Toman has a rich history in Iran, dating back to the early years of the Safavid dynasty (1501-1736). The term “Toman” originates from the Turkish word “Tümen,” which was used to refer to a unit of military command or a group of 10,000 soldiers in the Mongol empire. Over time, the تومان came to represent a unit of currency, with its value being tied to a specific weight of silver.

Historically, the Toman was subdivided into 10 “shahi,” the coin used in Iran during the Safavid period. For centuries, the Toman remained the primary unit of currency, but it was eventually replaced by the Iranian Rial in 1932. Despite this change, Iranians continued to use the Toman in everyday transactions, with the Toman being roughly equivalent to 10 Rials. As a result, the Toman never fully disappeared from the popular lexicon and is still widely used in casual and business conversations in the country today.

The Toman vs. The Rial: A Confusing Currency Landscape

Although the official currency of Iran is the Rial (IRR), the Toman is still the dominant unit of currency used for domestic transactions. This dual currency system can create confusion for those unfamiliar with Iranian finances. Official government and banking transactions are generally recorded in Rials, but in the market, the Toman is commonly used, and people often speak about prices in terms of Toman, as it is simpler to deal with.

For example, if the price of a product is quoted as 10,000 Rials in an official context, it will be referred to as 1,000 Tomans in casual conversation. This 10-to-1 ratio between the Rial and the Toman is the fundamental difference between the two currencies. In essence, 1 Toman is equal to 10 Rials, and this simple conversion helps people avoid dealing with large numbers when discussing everyday prices.

As inflation and the devaluation of the Iranian Rial continue to impact the economy, the use of the Toman has become more prominent. This is particularly true for small-scale transactions in the local markets, where prices are usually quoted in Tomans to simplify the process and make it easier for consumers to understand.

The Value of the Toman

The value of the Toman is directly tied to the economic conditions in Iran. Over the years, the Iranian currency has faced significant depreciation due to a variety of factors, including economic sanctions, high inflation, and a dependence on oil exports. As a result, the value of the Toman (and the Rial) has experienced dramatic fluctuations, which in turn has affected the purchasing power of ordinary Iranians.

At present, the exchange rate between the Toman and international currencies like the US Dollar or Euro varies significantly depending on the market. While the official exchange rate for the Rial is set by the government, black market rates often differ widely, reflecting the discrepancy between the official and unofficial economies. This disparity contributes to the instability of the currency and challenges faced by people trying to manage their finances in an environment where the value of the Rial or Toman is constantly in flux.

For instance, the official exchange rate may state that 1 USD equals 42,000 IRR (Rials), but on the black market, the rate could be far higher, potentially reaching over 100,000 Rials to the USD, depending on political and economic conditions. This fluctuation in the value of the Toman/Rial makes it essential for individuals and businesses to stay informed about current exchange rates and the broader economic context.

The Toman and Inflation in Iran

Inflation has been a major issue in Iran for several decades. Due to the combination of international sanctions, economic mismanagement, and an over-reliance on oil exports, the country has seen persistent inflation, which has caused the value of the Rial and the Toman to steadily decrease. The purchasing power of the Toman, which was once considered relatively stable, has eroded over time as prices for everyday goods and services have risen.

One of the most significant consequences of inflation in Iran is the rising cost of living. With wages often failing to keep pace with inflation, many Iranians find it increasingly difficult to afford basic necessities, including food, housing, healthcare, and education. The government’s efforts to control inflation have had limited success, and the country’s reliance on oil exports has left it vulnerable to fluctuations in global oil prices.

For ordinary people, this means that 1,000 Toman no longer buys the same amount of goods or services that it did in the past. For example, a loaf of bread, which might have cost a few hundred Rials in the past, may now cost several thousand Rials, or 1,000 to 2,000 Tomans. Similarly, the price of consumer goods like clothing, electronics, and household items has risen significantly due to inflation.

The Role of the Toman in the Iranian Economy

Despite the challenges associated with inflation and currency devaluation, the Toman continues to play a central role in the Iranian economy. It is used in a variety of sectors, including retail, banking, and services. Businesses typically quote prices in Tomans, and individuals use this currency for daily purchases, from food and transportation to entertainment and clothing.

The Toman also plays a crucial role in online transactions, particularly for e-commerce businesses in Iran. With the rise of digital payment systems and mobile wallets, people can now make payments and conduct financial transactions in Toman, which simplifies the process and helps reduce the impact of fluctuating exchange rates. However, despite the growth of digital payments, cash remains a popular method of exchange for many Iranians, especially in smaller transactions.

In addition, the Toman is an important unit of measurement for wages and salaries in Iran. Most workers in the country are paid in Rials or Tomans, and their income is subject to the same fluctuations in the value of the currency. For example, if inflation rises and the value of the Toman decreases, workers may find that their purchasing power has been reduced, even if their nominal wages have remained the same.

The Toman in the Context of International Trade

While the Toman is widely used for domestic transactions in Iran, it is not used in international trade or commerce. The Rial, Iran’s official currency, is the unit of account for the country’s international dealings. This means that when Iran engages in international trade, whether importing or exporting goods, the Rial is the currency used in transactions with foreign businesses and governments.

However, due to the limited convertibility of the Rial on international markets, Iran has faced difficulties in conducting international transactions. The imposition of economic sanctions has made it harder for Iranian businesses to access foreign currencies, which has led to a reliance on the black market and informal exchange networks. In many cases, businesses and individuals must engage in complex financial maneuvers to conduct international trade and access foreign goods or services.

Conclusion

The Iranian Toman continues to hold a prominent place in the everyday lives of Iranians, despite the economic challenges the country faces. As a widely used unit of currency in local transactions, the Toman is essential for everyday purchases and plays a central role in the country’s informal economy. However, its value is subject to significant fluctuations due to inflation, currency devaluation, and economic instability. This makes it essential for individuals and businesses to remain vigilant in managing their finances and understanding the broader economic conditions that impact the value of the Toman.

While the Toman may not be recognized internationally, it remains a symbol of Iran’s rich economic history and a reflection of the resilience of its people in the face of economic adversity. The continued use of the Toman despite its challenges demonstrates the adaptability of the Iranian economy and the importance of local currencies in shaping the lives of individuals and communities.