Earlier this week, Moscow expressed interest in dropping the US dollar for their bilateral trade with Iran. Now, the governor of the Central Bank of Iran has announced a plan to implement a system to allow importers and exporters to settle payments under a currency pairing system involving multiple foreign currencies, including the Russian ruble.
Central Bank Governor Ali Salehabadi made the announcement on 20 July, a day after Russian President Vladimir Putin visited Tehran where he held talks with President Ebrahim Raisi and Supreme Leader Ayatollah Ali Khamenei.
Putin praised the growing ties between Iran and Russia, especially in the area of trade and the integration of banking systems that are independent of the international SWIFT system.
“We all know that trade and economic relations between the two countries slightly exceeded four billion US dollars last year, although it may be wrong to count it in US dollars, and over time, we will probably move away from this practice as we develop our cooperation in the banking financial sector,” Russian presidential spokesman Dmitry Peskov said.
Trade between Russia and Iran has risen by 31 percent over the past several months, indicating an upward trend.
The visit by the Russian head of state coincided with the largest investment in the history of the Iranian oil and gas industry, signed by Russian state-owned Gazprom and the National Iranian Oil Company (NIOC) worth $40 billion.
The new rules by the Central Bank of Iran will facilitate the logistics for settling investment payments.
Iran and Russia are both looking at gradually abandoning the use of US dollars in their bilateral trade, Peskov said on 18 July.
During the meeting between President Putin and Ayatollah Khamenei, the Iranian leader also underlined the importance of foregoing the US dollar in bilateral trade as well as international trade generally.
“The dollar should be gradually removed from global transactions, and this is possible over time,” stated Ayatollah Khamenei.
The Central Bank announcement came alongside a similar policy by the Tehran Stock Exchange to allow trading in the Iranian rial and Russian ruble, which came into effect on 19 July.
On the first day of trading, two million rubles were traded at a rate of 5,390 rials per ruble.
The central banks of Iran and Russia are preparing to sign an interbank agreement, which will ease the logistical process of settling bilateral payments and wire transfers between domestic banks.
The two are also looking at linking their domestic card payment systems which would allow consumers to spend their money easily when traveling abroad.
An analysis from The Cradle columnist Pepe Escobar highlighted how western sanctions against Russia are backfiring in the wake of Moscow’s various countermeasures, including the transformation of the Russian ruble into a resource-based reserve currency.
And, in an exclusive interview by Escobar for The Cradle with Sergey Glazyev, a former top economic adviser to the Kremlin, Escobar revealed how Russia is shaping a new global financial system, as a result of the intense economic war waged against it.