The Iranian government has approved to revalue its rial tenfold and revert to the currency’s old name, the toman, the Fars news agency reported on Wednesday.

"The council of ministers, at a meeting presided by President Hassan Rouhani this morning, approved the central bank's proposed bill to change the national currency from the rial to the toman and delete four zeros," it said.

The bill by the Central Bank of Iran (CBI) to remove four zeros from the rial was presented to the government in January, Central Bank governor Abdolnaser Hemmati said then.

The proposed plan has now to go before the parliament for vote and final approval by the Guardian Council which vets legislation before it takes effect.

Iran had been weighing to drop several zeros from the rial for years, but the idea found traction after the national currency lost more than 60 percent of its value in 2018.

The Wednesday decision was made "to maintain the efficiency of the national currency and facilitate and restore the role of cash instruments in domestic monetary transactions," Fars said.

The reversal to the toman - in use until the 1930s - does away with a duel denomination which many visitors of Iran find confusing. While the rial is the official name, Iranians still make their calculations in toman.

The new toman will be divided into 100 rials - a tenfold redenomination of the current toman which is divided into 10 rials.

The rial went into a tailspin in anticipation of US sanctions after President Donald Trump decided to pull the United States out of a 2015 nuclear deal with Tehran and vowed “maximum pressure” on Iran's economy.

The steep drop disrupted Iran’s foreign trade and led to a spike in inflation as commodity prices shot through the roof, prompting the country to take drastic measures to arrest the downward spiral.

Those measures have helped the rial regain some of its value, trading recently at a rate not seen in months against major foreign currencies.

On Wednesday, the currency was trading at about 120,500 rials per US dollar on the unofficial market, up from its historic lows around 190,000 last September.

Iran’s currency began to slump in December 2017 when the government cut interest rates on saving bank accounts.

What initially appeared to be a controlled depreciation of the rial in a bid to boost local production and exports got out of hand later when the US announced pulling out of the nuclear deal and reimposing sanctions on Tehran.

The government’s later measures, including capping the official rate at around 45,000 rials to the dollar, exacerbated the slump because it created a network of underground foreign exchange traders.

According to leading US news magazine Foreign Policy, messaging applications were the platforms of choice by currency traders and middlemen for deliberate circulation of rumors and fake news to push the value of the dollar.