Turkey, Iran may trade in local currencies

Turkey, Iran may trade in local currencies

The U.S. re-imposition of sanctions on Iran has raised discussion of conducting trade in local currencies with Turkey. As Yeni Safak writes in an article "Turkey, Iran may trade in local currencies: Experts", Washington announced new sanctions on Monday targeting Iran's energy and financial sectors along with its shipping industry. More than 700 individuals, entities, aircraft, and vessels were blacklisted, including 50 Iranian banks and their domestic and foreign subsidiaries.

The U.S. government granted China, Greece, India, Turkey, Italy, Japan, South Korea and Taiwan a 180-day waiver for importing Iranian oil, which eased worries of supply reduction in the global markets after the sanctions went into effect.

Mehmet Koc, domestic policies coordinator of the Center for Iranian Studies in Ankara, said although Turkey is not a party of the sanctions, the move may pose problems for bilateral trade ties of the two countries. Stating that oil and gas trade are conducted in dollars, Koc said Turkey will continue to import Iranian oil and gas. "Turkey is among eight nations granted temporary waivers from the sanctions but at this point payment in dollars will not be possible," Koc said. He recalled that talks regarding trade in local currencies between Turkey and Iran still continue. Speaking about sanctions on the Iranian financial sector, Koc said: "There is no solution left for Iran except trading in the Turkish lira. At least it will need to use lira while obtaining basic needs from Turkey."

Head of Turkish-Iranian Industrialists and Businessmen Association (TISIAD) Perihan Fatih said the more sanctions on Iran increase the more Turkey's importance for Iran rises. "Many European countries can be reluctant to trade with Iran therefore they may do that via agencies in Turkey," Fatih said. Fatih noted that introducing regulations for trading in local currencies would be beneficial and advantageous for Turkish and Iranian business circles.

In 2017, bilateral trade volume between two countries totaled at $10.7 billion, up nearly 11 percent year-on-year. In the first 9 months of this year the trade volume was at $7.5 billion. The country's main exports groups consist of gold, steel profile, automotive supply products, fibreboard, land transportation vehicles to Iran while it purchases raw petroleum materials, natural gas, plastics in primary forms, metals other than iron and organic chemicals from Iran.

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