Deputy governor of the Central Bank of Iran for foreign exchange affairs says that even though currency swap agreements have been reached between Iran and some countries, the deals have yet to be implemented.
“Currency swaps are still very much on the CBI agenda and we are following up the matter” said Gholamali Kamyab, banker.ir reported.
After debates and speculations as to whether or not Iran should enter into currency swap mechanisms in order to curb the reliance on the US dollar in business transactions, the CBI said last year that progress had been made and bilateral currency swap treaties have been signed with Turkey, Iraq and Russia.
The fact remains, however, that the implementation of the agreements has been beset by ambiguity and their remains uncertain.
Acknowledging that the agreements with Russia and other countries have not been implemented, Kamyab reassured that the CBI is in negotiation with Turkey and other relevant parties to this effect.
As to why the signed agreements have not taken effect, the official explained that after currency swaps are signed “it is up to importers and exporters to show their inclination, because they can’t be forced to adopt the new mechanism.” On the other hand, he stressed that the banks are willing ready to execute the currency swaps because if they were not, they would not be able to sign them in the first place. .
The decision to promote currency swaps originates in the sixth five- year economic development plan (2016-21) that obliges the CBI to lay the groundwork for the signing of bilateral or multilateral currency swap agreements. The central bank should work in concert with the Foreign Ministry and plus the ministries of economic affairs, energy, oil and industries and trade.
Currency swaps are a relatively a new method in the history of business transactions according to which transactions are done using local currencies based on mutual agreements. In other words, instead of using medium currencies such as greenback or the euro, the currencies of source and destination countries are used.
