dilluns, 17 desembre 2018

Iran bans US dollar in trade activities

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Official sources from Tehran confirm that purchase orders based in US dollars will not be accepted by government import and export procedures. According to presstv.com (a broadcasting service affiliated with the Islamic Republic of Iran Broadcasting), Mehdi Kasraeipour, Director of Foreign Exchange Rules and Policies Affairs of the Central Bank of Iran (CBI) stated that policies aimed at ditching the dollar, came into effect on Wednesday the 28th by virtue of a letter sent by the Ministry of Industry, Mine and Trade. Kasraeipour added, “It’s been for a long time that Iran’s banking sector cannot use the dollar as a result of the sanctions. Therefore, the decision will not create major trouble for traders because the share of the greenback in Iran’s trade activities is not high.” Indeed, Iran cannot do business with American banks as a result of the American embargo.

By December 10th, 2017, the BCI communicated in a press statement that Iran “[is looking for] less dependency on dollar and more reliance on local currencies in trade deals as the common chapters for Iran.” The press statement came after a meeting with the Vice-Chairman of the Chinese People’s Political Consultative Conference (which is a political advisory body of the People’s Republic of China). Among other issues, they discussed increasing banking cooperation between the two countries, reducing dependency on the dollar, and bolstering the use of local currencies in trade deals between the two countries. China is one of the top importers of Iranian oil, and using the dollar in trade, only reinforces the petrodollar model, and that model is under strain. Iran aims at strengthening the rial, maybe not so much by weakening the dollar, but by boosting its already damaged economy which despite experiencing steady growth, is far from Western standards.

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