Iran believes that the US dollar’s share in its foreign exchanges is insignificant and its replacement should be suitable for trade with important partners like the United Arab Emirates, Russia, China and the European Union.
Tehran has announced that purchase orders by merchants that are based on the US dollar will no longer be allowed in import operations moving the country a step closer to ditching the greenback in its foreign trade activities, Press TV reported.
Mehdi Kasraeipour, the director of the Central Bank of Iran’s Foreign Exchange Rules and Policies Affairs, said the measure had become effective as of Wednesday, February 28.
Kasraeipour added that the move would not create any problems for traders because the US dollar’s share in the country’s trade was rather small.
“For a long time Iran’s banking sector hasn’t been able to use the dollar as a result of the sanctions,” he said.
According to him, Iranian merchants will now need to inform their suppliers to change the base currency from the dollar to other currencies to make sure that all import documents can be properly processed at Iranian entry points, the agency wrote.
Many traders worry, however, about the costs that this policy could create for them and eventually the consumers as merchants will have to face extra expenses converting the base currency from the dollar to other legal tenders.This would increase the costs for imports and eventually push up the prices of imported goods.
Iran’s emerging switch to non-dollar currencies comes at a time that outrage is building up in the country over an executive order by US President Donald Trump to ban Iranians from entering the United States.
Iran has already signed agreements with several countries including Russia, Azerbaijan, Turkey and Iraq to ditch the dollar and use mutual currencies.