Economy, Business And Markets

Cross Border Money Transfer Eased

Cross Border Money Transfer EasedCross Border Money Transfer Eased

Merchants can now exchange their foreign currency earnings at free market rates, partially easing trade and preventing cronyism.

Beginning yesterday, merchants can sell foreign currency to any overseas branch of Iranian banks and receive its free market rial equivalent in Iran, according to deputy minister Valiollah Afkhami-rad. The new regulation is aimed at easing trade and transfer of money. It is also an incentive to decrease the power of currency exchanges on money transfers, since banking sanctions were levied against Iran's banking system, it also brings these transactions under the central bank's supervision.

Iran's banking system is under duress due to western sanctions that have been placed against it in recent years over Iran's nuclear energy program. As part of these sanctions the central bank was kicked out of the global interbank network, SWIFT, in 2012. These sanctions have severely overburdened trade for Iranian merchants.

Officials are looking for ways to circumvent these limitations to revive business.

Recently Iran was working on increasing ties with Russia, whose economy has also been hit by western sanctions over the Russian Ukraine policy.

The two sides are working on establishing a joint bank to handle their trade settlements via a direct rial-ruble swap. Also, a trilateral agreement between Iran, Azerbaijan and Russia is being signed that may boost Iran's exports to Russia.

"This is all talk" says Afkhami-rad, even if a mutual bank is created, "merchants will not have much luck in doing business with Russia." Russia levies high tariffs on Iranian imports. Furthermore, merchants are still having difficulty acquiring Russian visas.