According to local media, the policy is in line with an official request by the Central Bank of Iran (CBI) and is specifically meant to address fluctuations in market rates of the US dollar.
The CBI’s director of Foreign Exchange Rules and Policies Affairs, Mehdi Kasraeipour, was quoted by IRNA news agency as saying the move had become effective from Wednesday by virtue of a letter sent to the Ministry of Industry, Mines and Trade.
— RT (@RT_com) February 12, 2018
He explained it wouldn’t create major trouble for traders because the share of the greenback in Iran’s trade activities was not high. “It’s been for a long time that Iran’s banking sector cannot use the dollar as a result of the sanctions,” said Kasraeipour.
As part of a trade embargo, US banks are banned from dealing with Iran.
“Considering that the use of the dollar is banned for Iran and traders are literally using alternative currencies in their transactions, there is no longer any reason to proceed with invoices that use the dollar as the base rate,” Kasraeipour added.
According to the official, Iranian merchants would need to inform their suppliers to change the base currency from the dollar to other currencies so that the related import documents could be processed at Iran’s entry points.
Merchants will also need to specify whether they would proceed with their payments through banks or currency exchange shops.
Tehran has long sought to switch to non-dollar based trade. It has already signed agreements with several countries and is in talks with Russia on using national currencies in settlements.
While meeting with Russian President Vladimir Putin in November, Iranian Supreme Leader Ali Khamenei said that the best way to beat US sanctions against the two countries was joint efforts to dump the American currency 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.”