Currencies, Emerging Markets, Frontier Markets

Iran “Seriously Thinking” Of Transition To National Currencies In Trade With Russia

Russia Iran FlagTehran is seriously thinking of transitioning to national currencies in trade with Russia, the former Iranian Foreign Minister and now the Director of the Strategic Council on Foreign Relations Kamal Kharrasi said on Friday, TASS news agency reports.

“Iran will welcome the conclusion of such an agreement in trade exchanges with Russia,” Kharrazi said. “This is a very important step, which Iran and Russia should take. Our officials are seriously thinking on this issue,” he added.

“There is no other way to get rid of the dominance of the U.S. dollar in trade exchanges,” Kharrasi said.

“Fortunately, the countries are currently developing interest in carrying out trade exchange in the national currencies,” he said.

In late January, Iran’s Ambassador to Russia, Mehdi Sanaei, said that Tehran and Moscow were working on a plan to switch bilateral trade to their national currencies by creating a joint bank or a mutual account.

“Both sides plan to create a joint bank, or joint account, so that payments may be made in rubles and rials and there is an agreement to create a working group [for this],” Ambassador Sanaei said.

“Such a bank would be able to exchange money between the two sides using rials and rubles and put aside dollars, euros and pounds,” the Chairman of the Iran-Russia Joint Chamber of Commerce Assadollah Asgaroladi said.

Last week, Iran and Russia signed an agreement to create a joint regulation body that will oversee interbank financial transactions between the two nations.

The memorandum of understanding (MOU) was signed by the deputy governors of the Central Banks of Iran and Russia on the supervision of the Central Banks over the financial operations of its banks, a move that takes both countries one step closer towards the establishment of a promised joint bank, which will help dodge the effects of U.S.-led sanctions.

Iran’s Central Bank announced in January that it was stopping mutual settlements in dollars with foreign countries and that agreements on bilateral swap in new currencies will be signed.

Iran and Russia are also in talks with Kazakhstan, Azerbaijan, and Turkmenistan to create a free-trade zone, an idea that was proposed by Kazakh President Nursultan Nazarbayev during the Caspian Summit in Astrakhan, Russia, in September 2014.

Iran, sanctioned by the U.S. and Western nations since its Islamic Revolution in 1979, has not been able to develop or export its oil and gas products. Sanctions were extended and justified over the fear that Iran was developing nuclear weapons. In 2012, the EU banned Iran from using SWIFT interbank payment system, which essentially cut Iran off from the global financial world.

Both the U.S. and EU are ready to lift sanctions against Iran once a comprehensive nuclear agreement is reached, RIA Novosti quoted an Iranian delegate as saying on Friday.

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