Iran is preparing to ditch US dollar in international trade

After US President Donald Trump included Iran on a list of Muslim-majority countries facing a temporary immigration ban, Tehran responded by threatening to stop using the American dollar.

Iran would either introduce a new common currency, in place of the US dollar, or use a portfolio of various currencies in foreign exchange and financial reports, according to Valiollah Seif, governor of the Central Bank of Iran.

Iran ditch US dollar international trade

Iranian media quoted Seif saying that the initiative would begin in March 2017, at the start of the fiscal year.

Trump signed an executive order on immigration last Friday, ostensibly to protect Americans from terror attacks. Under the order, immigrants from Iran, Iraq, Syria, Somalia, Libya, Sudan and Yemen will not be allowed to enter the US for 90 days. Additionally, the US refugee program is suspended for 120 days, and the acceptance of refugees from Syria is suspended indefinitely.

Trump told reporters, “It’s working out very nicely…You see it at the airports. You see it all over. It’s working out very nicely and we’re going to have a very, very strict ban, and we’re going to have extreme vetting, which we should have had in this country for many years.”

Massive protests cropped up at airports all over the country as a result, with demonstrators voicing their support for immigrants and refugees, as well as many professionals, including immigration lawyers, offering free consultations to those trapped in limbo.

Seif noted that the US dollar’s share in Iran’s foreign exchange is insignificant, and that its replacement should be suitable for trade with important partners like the United Arab Emirates, Russia, China and the European Union.

Agreements to stop using the dollar have been signed with Iran, Turkey, Iraq, Azerbaijan and Russia, although Seif pointed out that the agreements were not yet effective, as trade with those countries does not warrant the switch.

Some analysts have suggested that Tehran stands to make $41 billion in oil profits this fiscal year alone, and that switching from the dollar could pose a considerable financial risk. Iranian economic publication Donya-ye Eqtesad observed, however, that the dollar has already been largely replaced by other currencies in oil transactions, and that Tehran has been chiefly using it in official reporting.