Why Iran won’t ditch the dollar soon

Al-Monitor | Alireza Ramezani: The Central Bank of Iran (CBI) has for some time been working on a plan to stop using the US dollar in its financial reports. In a program aired on Iranian state television Jan. 28, CBI Gov. Valiollah Seif vowed that the regulator would no longer use the US currency in its reports starting with the Iranian fiscal year that began March 21. Yet there is no news of an actual change in policy. Indeed, analysts believe that even if the Central Bank is serious about dropping the dollar, the transition process will not go as smoothly as envisaged.

Forbes warned in a January report that the CBI’s decision to phase out the dollar could add a degree of currency risk and volatility. The Iranian economy is not in good shape and any currency shock could jeopardize a fragile recovery and ruin the minor achievements of the monetary regulator in controlling prices over the past few years. This is particularly the case since crude oil, Iran’s main export, is priced in dollars.

Many argue that it could be complicated for the Iranian government to switch its reporting to another currency since billions of dollars in government revenue are generated from oil exports. The CBI disagrees with the notion that it would face problems when it comes to reporting in another currency, but it does not conceal its fear of economic chaos should the dollar be replaced in a short span of time.

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