A little over two weeks ago Iran eliminated another function of the U.S.
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, Mines, 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 a
letter penned by Central Bank of Iran head Valiollah Seif.
In the missive, Seif argued that since Iran's banking system has no access to
dollar transactions because of decades-long 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 country's policy of
"completely removing the dollar" from its international business
dealings. The latter is indeed a policy that Iran 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 with Turkey. Further, it previously announced a plan to halt the use of
U.S. dollars as 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
was not deemed feasible as oil revenues are priced in US dollars, though it
remains on the CBI's agenda.
Going back to the latest manifestation of the Hassan Rouhani
administration's policy of doing away with the greenback, shortly after the
announcement of the ban on imports in dollars, Mehdi Kasraei-Pour, the
central bank's deputy for foreign exchange policies and regulations, asserted
that it will have "no impact" on the country's imports.
"Importers must only ask their foreign counterparts to offer their
pro-forma invoices in other currencies and use alternative currencies such as
the euro for their purchases," he said.
Mojtaba Khosrotaj, head of the Trade Promotion Organization, also said the
directive "shouldn't create any serious problems" considering the
type of imported goods and Iran’s trade partners.
But much of the private sector -- whose players bear the brunt of the
measure -- holds a different opinion. ...
... For the remainder of the report:
https://www.al-monitor.com/pulse/originals/20...rt-orders-us...
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