For the Western tourist, Iran is a cash economy. While I did hear rumors that you could use a credit card (I believe they said Visa was accepted) cash is still the preferred method of payment. I was also told that traveler’s checks could only be cashed at banks. I took only cash so I have no personal experience with either plastic or traveler’s checks.
The official bank rate (April ’99) was 6,800 Rials per US dollar. At exchange offices I got up to 7,900 Rials per dollar. Outside most exchange offices there were groups of men standing around with huge wads of 10,000 Rials notes: they can also do exchange for you. They will make themselves known – believe me. When the exchange offices were closed, I used them without any problem.
I rarely exchanged more than $20 at a time. I didn’t want to carry a huge packet of Rials around and I didn’t need that much money either. I had prepaid my hotels and found I spent very little: lunch/dinner never seemed to be more than $3; a taxi rarely more than $1; a Delster was usually $0.50 – and how many non-alcohol beers can you drink in one sitting?
For higher priced items, such as rugs, I bargained in dollars – but be careful. In some shops, those that deal primarily with Iranians, they will simply convert the price from Rials to dollars using the unfavorable official rate. In those situations it’s better to bargain in Rials. By the way, I never found a shop that wouldn’t take dollars.
The exchange offices and even shopkeepers seem to prefer newer US bills. I had one shopkeeper refuse a 10 dollar bill I had been given as change at another shop because it was dated 1977. It was in good shape and had no rips or holes. I couldn’t get the guy to explain why, but he was willing to lose the sale over it.
I found buying things in Iran was often confusing. First, the prices are always written in Arab numbers. You can ask that the price be shown to you on a calculator, but it is better to learn the Arab number – that way you can browse unaided.
Second, prices are almost always verbally quoted in Tomans, but written in Rials. To get from Rials to Tomans remove one zero from the Rials price, i.e. 10,000 Rials equals 1000 Tomans. This was endlessly confusing to me and I found the best approach – for small purchases, at least – was to have the amount in question in my hand in Rials. I would ask, “How much?” They would say, “One Thousand.” I would hold up a 10,000 Rials note and they would say, “Yes.”
Only tourist items need to be bargained for – rugs, jewelry and the like. Other goods, such as snack food and goods in stores that deal primarily with Iranian, are fixed prices – and bargaining, as I found, only seemed to confuse the clerk. Imagine walking into a 7-11 and asking the clerk if he will knock 10 cents of the price of a can of pop.