50% of Russo-Iran Trade in National Currencies

EghtesadOnline: Commercial transactions in national currencies between Russia and Iran exceeded 50% in 2019, Moscow's commercial representative in Tehran, Rustam Zhiganshin, said.

News ID: ۷۴۹۲۹۸

28 December 2019

"While in 2018 payments in national currencies amounted to 40%, this figure has already exceeded 50% in 2019," Zhiganshin told Sputnik.

The official stressed that use of the ruble and rial is crucial for maintaining bilateral trade.

Zhiganshin underscored the considerable volume of two-way trade, saying that bilateral trade increased by 21% between January and October to reach $1.67 billion dollars, according to Financial Tribune.

Russia exports electrical machinery, steel, rail cars, wood, vegetable oil, corn, barley, lamb and other goods, and imports cheese, vegetables and fruits.

Evading Sanctions

Zhiganshin said Russian companies are interested in collaborating with Iran despite the new US sanctions against Tehran.

"Russian companies remain interested in cooperation [with Iran] in such areas as the oil and gas industry, electricity generation, mining, the metallurgical industry, agriculture, public health, transportation and car construction," he said.

Tensions between Washington and Tehran continue to increase since May 2018, when Donald Trump abandoned the landmark Iran nuclear agreement, known as the Joint Comprehensive Plan of Action (JCPOA), and imposed tough penalties.

According to Zhiganshin, the US restrictions affected some companies that have subsidiaries in Iran.

The American hostility has targeted a broad range of businesses in Iran, from the key oil industry to the auto sector, trade in gold and precious metals, shipping, and more importantly  banking.

Despite the US sanctions, the Tehran government has maintained its trade with neighbors to the best of its ability.

The governor Central Bank of Iran Abdolnasser Hemmati said earlier Tehran had totally scrapped US dollar in trade with Russia and some other trade partners are using their national currency instead.

Iran and Russia have announced connectivity of their domestic financial messaging services to replace the SWIFT (Society for Worldwide Interbank Financial Telecommunication).

In September, Russian presidential aide Yury Ushakov said both countries are connected through the Russian SPFS and Iran’s SEPAM.

“To protect bilateral trade and economic ties from sanctions of third states,  we are taking measures to expand direct settlements, use national currencies, and  establish interaction between the Russian financial messaging system and Iran's SEPAM, as an alternative to making payments through SWIFT", Ushakov said.

SEPAM (a Persian acronym) currently functions as a vehicle to conduct inter-bank transactions electronically. It is said to be capable of being connected to foreign banks.

Following the threat of sanctions from SWIFT in 2014, the Bank of Russia created its own transaction system in the same year as an alternative to SWIFT to ensure intermittent financial services.

According to Sputnik, Iran exported $333 million worth of goods to Russia from January to July, down 6.2% year-on-year.  Russia’s exports to Iran totaled $999 million, up by 39.9% YOY.

Iran’s share in Russia's foreign trade during the period rose to 0.4% from 0.3% compared to the corresponding period last year.