28 Mar 2024
Saturday 17 March 2018 - 09:47
Story Code : 298023

Iran's break with dollar easier said than done

Al Monitor | : A little over two weeks ago, Iran eliminated another function of the US dollar in its internal workings in a move positioned amid yearslong plans to reduce dependency on the greenback. The consequences will be manifold and interconnected,but there are discrepancies in views concerning what will happen as a result among experts and officials.


On Feb. 28, the Ministry of Industry, Mine and Trade announced by way of a directive that all traders are henceforth barred from registering their import orders in US dollars. The abrupt directive that is effective immediately was put into motion per a government request conveyed through aletter pennedby Central Bank of Iran (CBI) headValiollah Seif.

In the missive, Seif argued that since Irans banking system has no access to dollar transactions because of decadeslong sanctions, using the currency in imports translates into having to employ a network of foreign exchange bureaus instead of banks while also going against the countrys policy of completely removing the dollar from its international business dealings. The latter is indeed a policy thatIran is pursuing on several fronts.

For instance, Tehran is actively seeking bilateral or multilateral currency swap deals with its chief trade partners and has already one in place withTurkey. Furthermore, it previously announced a plan tohalt the use of US dollarsas the currency of choice in financial and foreign exchange reports from the beginning of the current Iranian year (ending March 20). But that plan ended up being postponed because a sudden break with the greenback wasnot deemed feasibleas oil revenues are priced in US dollars, though it remains on the CBIs agenda.


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