Economy, Business And Markets

Iran's Central Bank Expanding Use of Rial in Foreign Trade

The Central Bank of Iran is working to expand the role of Iranian currency in the basket of its major trade partners as it is sidelining the US dollar
 The goal of the central bank is to entrench the rial in the currency basket of other nations.
 The goal of the central bank is to entrench the rial in the currency basket of other nations.

In line with plans to eliminate the US dollar in Iran's foreign trade by clinching monetary agreements, the Central Bank of Iran is pursuing the policy of expanding the role of Iranian currency in the basket of its major trade partners, the head of CBI's Exports Department said.

"The goal of the central bank is to entrench the rial in the currency basket of other nations, meaning that our major business partners would employ the Iranian national currency for imports as we use their national currencies," Samad Karimi was also quoted as saying by the official website of CBI.

The official, who was speaking in a late-night television program, added that such a goal would be realized through negotiations with trade partners to open accounts for Iranian commercial banks in local currencies.

"CBI has defined the regulations so that Iranian banks can open rial accounts for their foreign peers, which also paves the way for foreign banks to open accounts for their Iranian counterparts as part of multilateral monetary agreements," Karimi added.

According to the CBI official, realizing such agreements has been the fruit of concerted efforts among government entities such as the Ministry of Economy, Ministry of Industries, Ministry of Agriculture and Ministry of Foreign Affairs, which have also been joined by Iran's Chamber of Commerce, Industries, Mines and Agriculture.

Karimi stressed that the US dollar "is in no way used" in the foreign exchange interbank system of the country.

While noting that central banks and banks essentially endeavor to create a portfolio of global currencies in proportion to their value and risk, he said it was only natural for CBI to create a stable flow for the import of services and goods.

"To this end, CBI must move toward national currencies and that is what it did," the official added.

Pointing to the two monetary agreements reached with Turkey and Pakistan so far, he underscored the role of politics, and not sheer economics, in such deals.

Iran and Turkey's strong political will led to the currency swap agreement that was finalized some weeks ago, Karimi said, adding that "such a will and tendency currently exists between Iran and Russia as well and that is why negotiations have gotten close to suitable results".

Mohammad Reza Pour-Ebrahimi, the head of Majlis Economic Commission, has also spoken about the necessity of "eliminating the domination of the US dollar in the country's economic transactions".

Emphasizing that the administration must pursue the removal of greenback, he said the fact that reaching bilateral and multilateral monetary agreements has been specifically considered in the Sixth Five-Year Development Plan (2017-22) shows that the parliament is adamant in sidelining the US currency.

A slew of MPs have called for the greenback to be removed from Iran's international dealings, including members of both Majlis Economic Commission and Majlis Planning and Budget Commission.

The intensified calls follow recent remarks by Leader Ayatollah Seyyed Ali Khamenei who called for the US currency to be eliminated from the country’s foreign trade during his meeting with Russian President Vladimir Putin in Tehran.

No Dollar Needed for Iraq Visa

As part of an agreement between the governments of Iran and Iraq, the US dollar has not been required for receiving Iraq visas by Iranians undertaking the annual Arbaeen pilgrimage this year, with the national currencies of both countries bring used instead, according to the director general of border affairs at the Interior Ministry.

"This facilitated the process of Arbaeen pilgrimage, but we also call for the dollar to be removed throughout the year and not specifically for the pilgrimage season," Majid Aqababaei added in a meeting with Iraq's ambassador to Iran, Rajeh Saber Abboud al-Mousavi as reported by IRNA.

"I will announce Iran's request to remove the dollar throughout the year to Baghdad," the ambassador said.

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