Tehran, Iran, November 12
By Mehdi Sepahvand - Trend:
A proper implementation is needed for Iran’s currency deals in order to turn them into valuable tools in service of the country’s economy, an expert says.
“If these deals are used properly, they would prove effective in reducing Iran’s dependency on the USD and its damages,” Bahaoddin Hosseini Hashemi, the former president of Sarmayeh Bank, told Trend November 11.
On October 20, Iran and Turkey finalized what could be a historic deal to trade in their local currencies instead of the euro and the dollar.
Earlier in 2017, Iran made a similar deal with Russia to settle mutual payments by elimination of the US dollar and euro as trade intermediary currencies and use local currencies instead, a move the officials hope to alleviate the impact of nuclear-related sanctions on the economy.
Iran has in place similar agreements with Iraq and Afghanistan already. The country is under a US ban on the dollar.
“The fact to consider is that Iran would be unable to wipe out the dollar entirely. Many of the things we export are paid for in the dollar, such as oil, gas, petrochemicals, and minerals. Even eliminating the USD in the euro zone is not one hundred percent possible,” Hashemi noted.
“However, Iran would be able to minimize the effects of the USD ban. Of course, it would have to make agreements with other countries and then also some side costs would accompany the settlement of balances between two countries.”
Speaking of the downsides of currency swap deals, Hashemi further said that, besides costs of conversion, such deals limit the country to the goods and services provided by the other party of the deal.
“Moreover, if one country’s imports outweigh its imports from that country by a large amount, then each year the two sides would have to sit down to settle their accounts, which would also require the use of an international currency such as the USD or euro.”
