Iranians are queuing at bank branches to withdraw cash as demand for physical currency has increased sharply, with banks informally limiting withdrawals to IRR30mn to IRR50mn ($18 to $30) per person, Donya-e-Eqtesad reported on January 29.

Field observations show daily cash supplies at bank branches are being exhausted, with customers arriving late in the working day unable to obtain banknotes and so-called Iran Cheques.

According to the latest Central Bank of Iran figures, banknotes and coins held by individuals increased more than 23% in the first eight months of the current Iranian year, compared with less than 1% growth in the same period last year.

In November and December, cash in circulation rose 49% compared with the same month a year earlier due to fears of uncertainty in the banking sector and across the country over tensions with the US.

The surge in cash demand comes amid economic uncertainty, which analysts say is the main driver behind individuals holding more physical currency.

Reduced access to cash could disrupt economic activities and increase public dissatisfaction.

In inflationary conditions, the purchasing power of money declines, requiring individuals to hold larger amounts of cash for daily transactions. This has worsened in recent weeks, with internet outages knocking out the country’s ATM network, which relies on local network infrastructure.

Analysts have repeatedly called for printing larger denomination notes due to Iran's chronic high inflation, despite this push to print more, the IRR2mn "Iran cheque" is the largest available note, worth less than a carton of eggs, making cash effectively useless.

The daily ATM withdrawal limit was recently raised to IRR3mn, but the low ceiling remains a primary reason for increased visits to bank branches.

A review of published data shows that people are more inclined to hold cash in uncertain conditions. This is clear in the experience of the 12-day war in 2025.

Although there were no problems with using bank cards from other banks except for two banks, the lack of banknotes in ATMs became one of the banking challenges of that time due to the high demand for cash.

According to Central Bank officials, during the war, the injection of banknotes into banks and ATMs increased by up to 50%, with the focus on hospitable provinces.

According to the CBI’s eight-month statistics, the demand for banknotes in the months after the war has not returned to pre-war conditions. 

There has also been a rush to purchase foreign currency, including the US dollar, with it trading at its highest ever rate on the free market on January 29, trading at IRR1.65mn earlier, prior to the announcement of a new head of foreign currency. The currency has clawed back some position against the US dollar at IRR1.58mn at UTC 12:00, website Bonbast reported.