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UPDATE 1-Iran-Russia trade in domestic currencies -Iran envoy

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Fri Jan 20, 2012 6:56am EST

* Russia-Iran move comes after new sanctions against Tehran

* Russia already uses rouble in trade with China

MOSCOW Jan 20 (Reuters) - Iran and Russia have started using their domestic rial and rouble currencies in bilateral trade instead of the U.S. dollar, Iran's envoy to Moscow said on Friday, after the United States imposed new sanctions on the Middle East state.

"(Trade) is based on our national currencies," said Iranian ambassador to Russia Seyed Sajjadi.

"We started this work long ago. Iranian businessmen are buying products in Russia and are using the rouble as (payment) currency ... The U.S. dollar has no (economic) support base," he said speaking at a news conference.

Iran is seeking to boost trade after the United States imposed additional sanctions in late December in a response to Teheran's refusal to abandon uranium enrichment.

The European Union is expected to finalise the ban on imports of Iranian oil at a meeting next week.

Russia, opposing oil sanctions against Iran, has long promoted the rouble as an international currency which could be used in bilateral settlements.

In 2010 Moscow began offering to exchange roubles for Chinese yuan as the two nations look to boost bilateral transactions in their own currencies and reduce their reliance on the dollar.

China accounts for 10.1 percent of Russia's foreign trade and is its second-largest trading partner after the European Union, while Iran's share in Russia's trade in 2011 stood at 0.5 percent.
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Comments (2)
skibum wrote:
That’s fine, but unline the Yuan and Rouble the Iranian currency can now not be exchanged on the free market. So unless Russia is only going to use Iranian money to buy oil it is relatively useless. It also means that Russia can pretty much dictate how much they feel the Iranian currency is worth since it’s not being regulated by the global markets. This could mean that may not be discounting their oil to Russia, but if the Russians undervalue their currency they will be getting a discount. They could also charge large conversion fees for the money.

Also, let me add. Even though Russia and China claim to be trading currency and detaching themselves from the dollar they really are not. The international monetary system is still used to determine what the other currency is worth on the free market. Otherwise, China and Russia would have to employ huge agencies on their own to negotiate back and forth with each other to determine value. What a waste of cash that would be.

Jan 20, 2012 10:22am EST  --  Report as abuse
tzmaker wrote:
Both Iran and Russia have very little credibility in managing their currencies reliably in the last two decades. The Ruble is practically pegged to a Euro-Dollar basket and the Iranian currency is one that no one would want to hold on right now. Locals in Russia and Iran rely heavily on dollars (to a lesser extend Euros) for their value storage purposes. local currencies are for pocket money.

These comments are completely bogus from the Iranians… they surely use a Western currency to settle transactions. Like the previous comment said, the russians are surely using a big discount by buying Iranian goods as few others are doing so right now.

Jan 21, 2012 11:49am EST  --  Report as abuse
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