Energy Minister Alexander Novak says Russia is considering payments in national currencies in trade with Iran and Turkey amid their escalating tensions with the US.
“There is a common understanding that we need to move towards the use of national currencies in our settlements. There is a need for this, as well as the wish of the parties,” Russian broadcaster RT quoted Novak as saying Monday.
“This concerns both Turkey and Iran – we are considering an option of payment in national currencies with them,” he added.
The central banks of Iran and Turkey signed an agreement last year on using local currencies in trade instead of the US dollar and the euro.
Tehran and Moscow are currently in talks to agree on a similar arrangement. Novak said this “requires certain adjustments in the financial, economic and banking sectors”.
The idea of using national currencies in trade got a major boost during Vladimir Putin’s November visit to Tehran where Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei told the Russian president that the best way to beat US sanctions was to dump the dollar in trade.
The Leader says the US-led coalition’s defeat in Syria is “an undeniable reality.”
Both Iran and Russia are under unilateral US sanctions which have complicated transactions in dollars because they have to be processed through the US financial system.
Rouble, rial, lira suffer biggest falls
On Monday, Russia’s rouble suffered its biggest daily fall in over three years and stocks in major Russian companies also slid following a new round of US sanctions targeting some of Russia’s biggest tycoons.
In Iran, the rial hit an all-time low of 62,000 against the US dollar on the unregulated market before the government intervened and set a unified rate of 42,000.
First Vice President Es’haq Jahangiri said the government would sell the US dollar at 42,000 rials to all individuals and businesses, starting Tuesday. Anyone found selling the dollar at rates higher than that “will be dealt with severely” by judicial authorities and the police, he said.
Jahangiri said the sudden decline was “unnatural and unprecedented” because tens of billions of dollars worth of foreign currency had flowed into Iran in recent weeks from the country’s export revenues.
The vice president said Iran’s “enemies and opponents, especially the Americans” were making great efforts to present Iran’s economy as turbulent and discourage anyone from working with the country.
Trump’s threats to leave a nuclear agreement with Iran on May 12 and impose new sanctions on the country have been weighing down on the rial, prompting a flurry of dollar purchases among ordinary Iranians.
Meantime, while Turkey is not under any specific sanctions its rising tensions with the US and the Europeans over their support for Kurdish militants in Syria and other issues have made traders jittery and affected the country’s economy.
The lira touched an all-time low to the US dollar and the euro on Monday, prompting President Recep Tayyip Erdogan to promise that interest rates would be lowered to “save” investors.
Over the recent months, Turkey has steadily been inching closer to Russia and Iran and calibrating its policies more than before with those of the two countries.
Officials in both Iran and Russia have said they were speeding up work on reducing dependency on US payment systems and the dollar as a settling currency.
Russia has already introduced a new national payment system called Mir to cut reliance on Western systems, such as Visa and MasterCard.
Today, more than 380 banks and practically all trade and service points, including cafes, shops, restaurants and petrol stations working in Russia, accept Mir cards which are issued by 120 banks.
Mir payment system in Iran
On Monday, chairman of the Russian State Duma Committee on Financial Markets Anatoly Aksakov said in Tehran that Mir payment system may start functioning in Iran by the end of this year.
Iranian Minister of Economic Affairs and Finance Masoud Karbasian has said Tehran was working to remove technical problems on the way of a full integration of Iran’s Shetab and Russia’s Mir payment systems.
Aksakov is in Tehran as part of a parliamentary delegation led by Duma chairman Vyacheslav Volodin to work out paperwork and other requirements for implementation of major projects as Iran and Russia expand relations further.
Aksakov said Russian and Iranian banks have opened more than 60 mutual correspondent accounts over the past six months. The volume of transfers involving these accounts have increased seven fold over the past two years, he added.