If the ruble’s value stabilizes, a plan for bypassing the US dollar and euro in Iran-Russia trade could take effect in the current fiscal year (which started March 21), said Mohammad Hossein Barkhordar, head of the supreme council of imports at Iran’s Chamber of Commerce of Commerce.
The idea to make trade via a ruble-rial pair instead of using dollar or euro as intermediaries was first posed in October, 2014. However, as new sanctions were imposed on Russia by the United States, the Russian ruble took a nosedive and the proposal was suspended.
“Given the fact that many sanctions imposed on Russia have now been lifted, the plan can be taken up once more,” ISNA quoted the official as saying.
Using domestic currencies in trade with neighboring countries can prove highly beneficial, he said, explaining that countries such as China have gone further than applying the method with only their neighboring countries and are using domestic currencies in trade with several European countries as well.
It is important for such agreements to be sustained; they must not be observed as temporary relief measures that are only used in times of sanctions, he said, adding that although no sanctions are imposed on China, the country has adopted the policy in trade with many countries.
Reliance on the dollar and euro in trade could have been reduced significantly if using domestic currencies were incorporated when western sanctions were first imposed on Iran over its nuclear energy program, he said.
Such bilateral agreements can also be adopted for trade with Iran’s other major business partners such as India, China, and Korea, as well as European countries that want to invest in Iran.
The Central Bank of Iran (CBI) alone cannot create the conditions for such change in bilateral trade. It is necessary for traders (importers and exporters alike) to meet with CBI officials and discuss the issue so that all intricacies can be clarified and settled, the official stressed.
He also maintained that “initial contracts on the issue should be short-term, until mutual trust is built.” Future contract periods however can be extended or monetary ceilings can be set. These are all issues which should be expounded during the CBI meetings.
