Iran, Russia to scrap USD in bilateral trade for national currencies
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The two neighboring countries agree on several measures to facilitate non-SWIFT financial transactions between their businesses.
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Central Bank of Iran Governor Mohammad-Reza Farzin (R-center) meets with his Russian counterpart Elvira Nabiullina (L-centre) in Tehran on May 23, 2023 (Iranian media)
Emerging financial relations between Iran and Russia saw the use of non-SWIFT messaging systems and the establishment of bilateral brokerage relations using national currencies by banks and businesses in both countries, according to information from the Central Bank of Iran as cited by Fars News on Wednesday.
During a visit to Moscow, Iran's Central Bank chief Mohammad-Reza Farzin and his Russian counterpart Elvira Nabiullina finalized agreements to conduct bilateral trade using their national currencies.
Read more: EAEU members sign landmark free trade agreement with Iran
The deals included establishing a letter of credit and a line of credit between financial institutions from the two countries.
One of the agreements saw Russia's Sberbank and Iran's Bank Melli creating a line of credit for Iran's imports of Russian products, worth 6.5 billion rubles (almost $71 million), which would facilitate Iranian exporters to access Russian loans.
Mohammad-Reza Farzin also proposed leveraging the capabilities of the BRICS bloc to streamline and facilitate transactions, particularly during Russia's tenure as the presiding nation within this influential group of emerging economies. This proposal received an enthusiastic endorsement from his Russian counterpart.
The precise technical aspects of this groundbreaking agreement will be thoroughly examined and discussed in forthcoming meetings between the central bank governors of the two neighboring countries.
Both Iran and Russia, grappling with stringent Western sanctions, have repeatedly criticized the United States and its European allies for weaponizing the dollar as a coercive tool in international affairs.
As active members of BRICS, they have initiated collaborative efforts aimed at reducing their dependence on the green note in mutual trade.
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Farzi announced earlier this year that Iran and Russia have established a direct link between their central banks.
The SEPAM and Russian SFPS electronic financial systems were connected in the process, both of which are an alternative to the Western-dominated SWIFT system.
Last May, the first representative office of a Russian bank established a presence in Iran.
The International Trade Bank - VTB Bank - is Russia's second-largest bank and is co-owned between the private and public sectors, but with majority shares held by the state.
The opening of the Bank's entity allowed Iranians, especially business owners and tradesmen, to obtain safe access to many financial systems in Africa, Latin America, Asia, and Europe where VTB and its subsidiaries are active.
Directly following the event, two Iranian banks announced the launching of measures to enter the Russian market.
