News ID: 212827
Published: 0239 GMT April 07, 2018

Russia mulls oil payments in national currencies for Turkey, Iran

Russia mulls oil payments in national currencies for Turkey, Iran

Russia is considering an option of payments for oil in national currencies, in particular with Turkey and Iran, Energy Minister Alexander Novak told reporters.

According to TASS, he said that the parties are interested in it but there is also a matter of conversion of currencies and their further use.

"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. This concerns both Turkey and Iran — we are considering an option of payment in national currencies with them. This requires certain factors in financial and economic sector and in banking sector," he said.

Novak noted that if there is an opportunity to make payments in national currencies and companies are ready for it, it is necessary to study properly the conversion of this currency and its further use.

Last October, the central banks of Turkey and Iran formally agreed to trade in their local currencies, Turkish Prime Minister Binali Yildirim said in a move aimed at increasing bilateral trade.

Based on the deal, the Iranian rial and Turkish lira will be easily converted to help reduce the costs of currency conversion and transfer for traders. The countries had been using euros.

"Trading with local currencies is the most significant step to improving economic ties. The central banks of both countries agreed on this issue and they will inform other banks about how the deal will be applied," Yildirim said at a joint news conference with Iran's First Vice President Es'haq Jahangiri.

"Trading in local currencies will be encouraged and this will contribute to making trading easier and increase the trade volume and diversity," Yildirim added.

Turkish President Recep Tayyip Erdogan said in October that the deal was aimed at raising Turkish-Iranian trade to $30 billion from the current $10 billion.

The deal is in line with Iran's efforts to do away with unilateral US sanctions, which remain intact despite the lifting of international financial sanctions on Tehran last year under a 2015 nuclear deal between Iran and six major powers.

US banks are still not allowed to do business with Iran.

European lenders also face major problems, notably with rules prohibiting transactions with Iran in dollars — the world's main business currency — from being processed through the US financial system.

Iran has secured banking ties with only a limited number of smaller foreign institutions as major foreign banks are wary of the US sanctions.

"This is an important step to expand trade cooperation between Iran and Turkey," Jahangiri said at the joint news conference.

Last year, during Iranian President Hassan Rouhani's visit to Moscow, the two sides agreed to continue cooperation to stabilize global energy market and ensure sustainable economic development.

They said they will be working on favorable conditions for using national currencies in settlements. Moscow and Tehran have also discussed developing inter-bank cooperation and ensuring an increase in trade and investments.

Russian President Vladimir Putin and Rouhani also focused on the potential creation of a free trade zone between Iran and the Eurasian Economic Union, which consists of Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan.

Rouhani told journalists that such a trade zone could significantly improve the trade situation and 'create new conditions' in regional trade.

In November 2017, Iran's Leader Seyyed Ali Khamenei said that the best way to beat US sanctions against Iran and Russia is joint efforts to dump the dollar 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'.

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