Under the flames of war that continue to burn in the Middle East,Iranian authorities are issuing new 10 million riyal banknotes, the highest denomination the country has ever issued.. Analysts pointed out that the Iranian government's move was aimed at controlling soaring inflation and meeting the people's demand for cash during the US-Iran war.

According to the current real-time exchange rate, the price of this new 10 million rial banknote can only be exchanged for about 7 US dollars, or 53 yuan...

Domestic banks in Iran have previously been targeted by U.S. and Israeli air strikes. Fearing that electronic systems could be paralyzed, Iranians formed long lines at cash machines to withdraw cash, and many places quickly ran out of cash.

The newly issued pink banknotes feature the 9th-century Yazd Jammeh Mosque on the front and the 2,500-year-old Bam Castle on the back. It is now the largest denomination Iranian banknote in circulation - replacing the 5 million riyal note which was introduced in early February.

Iran's central bank said the note was issued to "ensure public access to cash", adding that electronic systems - including debit cards, mobile banking and online banking - will continue to serve as the main platform for financial transactions.

However, despite the Iranian government's assurances of a continued supply of cash after the war broke out, local banks have provided limited cash to customers seeking to withdraw their money. The issuance of the new banknotes is the latest sign of a serious blow to Iran's economy as the war enters its fourth week.

The United States and Israel have targeted infrastructure, including banks, putting more pressure on businesses already affected by continued bombing and the indefinite closure of Iranian airspace. As trade routes closed, prices for imported goods rose.

It is reported that on March 11, a building belonging to Bank Sepah, which provides services to the Iranian armed forces and the public, was hit by a missile. This move further exacerbated the concerns of the Iranian public.

The bank said on Wednesday that services had been restored, allowing customers to shop in stores and use ATM machines, and that online banking services would be restored soon.

rising inflation

Over the years, U.S. sanctions, dwindling oil revenues, and persistently high inflation have put the Iranian economy under tremendous pressure, leading to a sharp devaluation of the rial. The rial lost 40% of its value in the months after Israel's 12-day war ended last June, and the economic downturn triggered massive protests in Iran in January.

Before the US-Israeli attack on Iran on February 28, the Iranian rial exchange rate further depreciated to a historical low of 1.66 million rials per US dollar. However, as of last Friday, the exchange rate had rebounded to approximately 1.5 million rials.

According to data from the Iranian Bureau of Statistics, Iran's annual inflation rate was as high as 47.5% year-on-year in the month ended February 19.

After the Iranian government eliminated foreign exchange subsidies for basic imported goods, inflation rates for both food and beverages in Iran surged to over 105% during the same period. Instead, the government launched a food stamp program that provides 80 million Iranians with monthly credit to buy staple foods at designated stores.

It is worth mentioning that in November last year, the Iranian government introduced a law that planned to erase "four zeros" from the face value of the rial within five years to simplify transactions and reduce the cost of printing money. On this new 10 million rial banknote, the last "four zeros" are also printed very blurry, while the "1,000" is printed in bold. This design style, adopted by all newly printed banknotes since 2019, is intended to aid the transition.

Analysts pointed out that the Iranian rial strengthened against the U.S. dollar after the war because of the reduction in Iran's foreign trade, the cancellation of overseas trips by Iranians, and the increase in the number of people selling foreign currency because they were in urgent need of cash to pay for expenses.

A foreign exchange broker in Tehran said: "Only those who sell their properties or cars and do not want to keep their money in rial will buy foreign currencies. But on the other hand, the supply has actually reduced a lot. In this case, only those who urgently need money will sell their foreign currencies."