Alwaght- Iran has announced that purchase orders by merchants that are based on the US Dollar would no longer be allowed to go through import procedures in the country.
The move is seen as a step closer to a plan to ditch the dollar and is also in line with an official request by the Central Bank of Iran (CBI).
The ban was expedited to address fluctuations in market rates of the dollar over the recent past.
The CBI’s director of Foreign Exchange Rules and Policies Affairs, Mehdi Kasraeipour, was quoted by IRNA news agency as saying the move had become effective from Wednesday by virtue of a letter sent to the Ministry of Industry, Mines and Trade.
Kasraeipour emphasized that this was not expected to create any major trouble for traders, stressing that this was because the share of the dollar in Iran’s trade activities was not high.
“It’s been for a long time that Iran’s banking sector cannot use the dollar as a result of the sanctions,” he said.
US banks are still banned from dealing with Iran as part of an old US trade embargo that still remains in place. Accordingly, this is believed to have already effectively blocked any transactions with Iran which is based on US dollars because they would ultimately have to be cleared in the US.
“Considering that the use of the dollar is banned for Iran and traders are literally using alternative currencies in their transactions, there is no longer any reason to proceed with invoices that use the dollar as the base rate?” Kasraeipour said.
The official further emphasized that Iranian merchants would need to inform their suppliers to change the base currency from the dollar to other currencies so that the related import documentations can be proceeded at Iran’s entry points.
Iran has long sought to switch to non-dollar based trade. It has already signed agreements with several countries and is in talks with Russia on using national currencies in settlements.
While meeting with Russian President Vladimir Putin in November, Iranian Supreme Leader Ali Khamenei said that the best way to beat US sanctions against the two countries was joint efforts to dump the American currency in bilateral trade. He told President Putin that by using methods such as eliminating the US dollar and replacing it with national currencies in transactions between two or more parties, the sides could isolate the Americans.
