30 December 2010
India's central bank allowed companies from the South Asian nation to trade with Iran in currencies other than the dollar and euro, a move in support of Iran's policy for using currencies other than the US dollar.
Companies will be allowed to settle current account and trade transactions with Iran outside the Asian Clearing Union or ACU, a regional payment settlements arrangement, the Indian central bank said in a notification on Tuesday. Participants in the ACU settle transactions in either dollar or euro, according to the ACU's website.
The change will make it flexible "to an extent" for Indian importers and exporters to step out of the ACU's settlement mechanism and deal in more currencies, said Rahul Tripathi, assistant professor in international political economy at Goa University in the Indian state of Goa.
Iran is facing United Nations sanctions and unilateral measures from the US and the European Union aimed at curbing the country's civilian nuclear program.
"It may certainly help Iran as it gives the country greater flexibility to conduct its operations outside the ambit of ACU," Tripathi said in an interview with Bloomberg on Wednesday.
ACU, based in the Iranian capital Tehran, settles trade transactions among Bangladesh, Bhutan, India, Iran, Nepal, Pakistan, Maldives, Myanmar and Sri Lanka.
The United Nations in June stepped up punitive measures against Iran over its peaceful nuclear program, applying a fourth round of sanctions, and the US and European Union later imposed additional restrictions. Iran says it is enriching uranium for peaceful purposes.
Following the United States' continued and aggravating hostilities towards Tehran, the Islamic Republic started encouraging the world states, specially those in the region, to reduce dependence and find an alternative to the US dollar.
The credibility of the greenback has been eroded by the global economic crisis.
National Currencies
In October, Iran called on the regional countries to use their national currencies in lieu of dollar and euro in settling accounts for implementing their projects.
The CIS and the Caspian region countries should carry out transactions in national currencies rather than in US dollar and euro, Managing Director of Iran's Bank Saderat Mohammad Jahromi said.
"The world currency basket is changing. The dollar and euro go down every day. Due to this, of course, it is necessary to use the new currency basket in the international currency market," Jahromi said.
"I recommend the countries of the region and the central banks of these countries to use their national currencies instead of the dollar and euro," he said.
"Western countries spread their banking system to others. The use of this (western) system leads to financial problems. I believe that countries should study the Islamic banking system and implement it," Jahromi said.
In November, the head of Iran's Bank Melli (BMI) said Iran's Central Bank and BMI have entered into negotiations with several countries and international banks regarding the use of the Iranian rial, the official currency of Iran, in international transactions and operations.
"Some countries have agreed to use the Iranian rial for payment in some transactions," said Mahmoud Reza Khavari, President and CEO of Bank Melli Iran, who also heads the coordination council of the CEOs of Iranian banks.
India's central bank allowed companies from the South Asian nation to trade with Iran in currencies other than the dollar and euro, a move in support of Iran's policy for using currencies other than the US dollar.
Companies will be allowed to settle current account and trade transactions with Iran outside the Asian Clearing Union or ACU, a regional payment settlements arrangement, the Indian central bank said in a notification on Tuesday. Participants in the ACU settle transactions in either dollar or euro, according to the ACU's website.
The change will make it flexible "to an extent" for Indian importers and exporters to step out of the ACU's settlement mechanism and deal in more currencies, said Rahul Tripathi, assistant professor in international political economy at Goa University in the Indian state of Goa.
Iran is facing United Nations sanctions and unilateral measures from the US and the European Union aimed at curbing the country's civilian nuclear program.
"It may certainly help Iran as it gives the country greater flexibility to conduct its operations outside the ambit of ACU," Tripathi said in an interview with Bloomberg on Wednesday.
ACU, based in the Iranian capital Tehran, settles trade transactions among Bangladesh, Bhutan, India, Iran, Nepal, Pakistan, Maldives, Myanmar and Sri Lanka.
The United Nations in June stepped up punitive measures against Iran over its peaceful nuclear program, applying a fourth round of sanctions, and the US and European Union later imposed additional restrictions. Iran says it is enriching uranium for peaceful purposes.
Following the United States' continued and aggravating hostilities towards Tehran, the Islamic Republic started encouraging the world states, specially those in the region, to reduce dependence and find an alternative to the US dollar.
The credibility of the greenback has been eroded by the global economic crisis.
National Currencies
In October, Iran called on the regional countries to use their national currencies in lieu of dollar and euro in settling accounts for implementing their projects.
The CIS and the Caspian region countries should carry out transactions in national currencies rather than in US dollar and euro, Managing Director of Iran's Bank Saderat Mohammad Jahromi said.
"The world currency basket is changing. The dollar and euro go down every day. Due to this, of course, it is necessary to use the new currency basket in the international currency market," Jahromi said.
"I recommend the countries of the region and the central banks of these countries to use their national currencies instead of the dollar and euro," he said.
"Western countries spread their banking system to others. The use of this (western) system leads to financial problems. I believe that countries should study the Islamic banking system and implement it," Jahromi said.
In November, the head of Iran's Bank Melli (BMI) said Iran's Central Bank and BMI have entered into negotiations with several countries and international banks regarding the use of the Iranian rial, the official currency of Iran, in international transactions and operations.
"Some countries have agreed to use the Iranian rial for payment in some transactions," said Mahmoud Reza Khavari, President and CEO of Bank Melli Iran, who also heads the coordination council of the CEOs of Iranian banks.
© Iran Daily 2010
