Iran and Russia have begun to take some small – but potentially significant – steps towards removing the U.S. dollar from their bilateral trade, with the launch of a settlement system using their own currencies.
The Iran Currency Exchange (ICE) listed the ruble-rial trading pair in July, following a trip to Moscow by Central Bank of Iran Governor Ali Salehabadi earlier in the month, forbes.com reported.
The new arrangement means the two countries can now settle trading debts in each other’s currencies. The first trade took place on July 19, with a RUB3 million ($48,000) exchange. That also happened to be the day that Russia’s President Vladimir Putin arrived in Iran for talks with President Ebrahim Raeisi and Supreme Leader Ayatollah Seyyed Ali Khamenei.
Iranian media have reported that the new system could reduce the demand for dollars by $3 billion a year. Bilateral trade between Iran and Russia was worth $4 billion in 2021 and the two countries say they are hoping to ramp up bilateral trade to $8 billion in the short-term.
The new trading arrangement allows them to avoid the use of dollars and, by doing so, also sidestep the impact of some sanctions.
Iranian officials say they hope to expand the new bilateral settlement system to include the currencies of other key trading partners, including the Turkish lira, the Indian rupee and the United Arab Emirates dirham.
“We will offer other currencies in future to have a diversified basket and to reduce the influence of currencies like the dollar,” Salehabadi said on July 21.
If that happens, the effect will be to create a network of agreements enabling Iran to carry out trade without having to resort to the dollar or the euro.