Iran Considers Currency Swaps With Turkey to Ease Trade, Banking Transactions

** Iran’s exports to Turkey during first nine months of 2017 amounted to around $5.84 billion, 75.7% more year over year. In return, Turkey exported $2.31 billion worth of goods, compared to $3.81 billion in the corresponding period of previous year, indicating about 65% decline.
** Iran and Turkey are said to have recognized the innovation of digital currencies; both countries are looking to launch their coins – which will be issued by Central Banks.

April 24, 2018 (BE2C2) — With sanctions pressure looming from the United States, the Central Bank for OPEC member Iran said it was looking to swap currencies with Turkey to ease trade and banking transactions between the two neighbors.

In an effort to facilitate trade, the Central Bank of Iran said during the weekend it put monetary treaties and Iranian rial-Turkish lira currency swap mechanisms high on the agenda with its major economic partners. Its first line of credit was opened with Turkey last week. The LC was opened based on an agreement singed between Iran and Turkey’s central banks the previous year.

“It should be noted that there is no need for a third currency such as the U.S. dollar or euro in this model to settle foreign exchange,” the bank said Saturday. “By using this method, all purchases, transfers and financial transactions have been transferred to the banking system through currency operations and the risk of business operations between the two countries will be minimized.”

The economic arrangement with Turkey could give Iran a way to continue trading should it face renewed sanctions pressures in May.

U.S. President Donald Trump decides next month whether to issue a sanctions waiver to Iran. If he doesn’t, he would violate the terms of the U.N.-backed nuclear agreement and the deal would unravel. Trump has surrounded himself with advisors with a hawkish stance on Tehran, though Iran’s foreign minister, Javad Zarif, said Sunday on “Face the Nation” on CBS News that it was Washington that was building a trust deficit on the international stage.

Also Read: Iran to Replace US Dollar With Euro in Official Financial Reports

Zarif said Iran has no plans to end the deal, but will exercise its options — including resuming its nuclear program — if the United States follows through on plans to back out.

Sanctions on Iranian oil exports in the European market would come at a time when traders are watching a shrinking gap between supply and demand. When the balance was tilted heavily toward the supply side two years ago, markets had a lot of breathing room for unrest. With the gap indicating a market in balance, there’s no room for geopolitical risk.

Iran is exporting around 1 million barrels per day and ending the deal could lead to a spike in crude oil prices. Pointing to an agreement led by the Organization of Petroleum Exporting Countries, Trump last week complained that oil prices were too high. Those higher oil prices are creating headaches for U.S. consumers at the gas pump, diminishing some of the impacts of Trump’s tax relief.

Iran’s Central Bank said the trade volume with Turkey was about $6 billion in 2016-2017.

Trade between the two trading partners stood at $8.15 billion during the first nine months of 2017, according to the statistics released by the Turkish Statistical Institute in November 2017. The figure indicates a 14.24% rise compared to same period of the preceding year, according to numbers released.

Iran’s exports during the nine months amounted to around $5.84 billion, 75.7% more year over year. In return, Turkey exported $2.31 billion worth of goods, compared to $3.81 billion in the corresponding period of last year, indicating about 65% decline.

Iran and Turkey To Launch National Crypto Coins

Meanwhile, Iran and Turkey are said to have recognized the innovation of digital currencies; both countries are looking to launch their coins – which will be issued by Central Banks. Venezuela has already started offering crude oil backed Petro coins.

Turk parliamentarians have also been trying to make a consensus for the potential launch of state-backed cryptocurrency called “Turkcoin.”

Iran and Venezuela are among those countries that have been facing strict sanctions from the United States and the United Nations. Both countries are facing a financial crisis, and they aren’t allowed to sell their products and services in international markets – the idea of raising and moving cash through digital currencies has been viewed as an attempt to evade sanctions.

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