Iran, Pakistan Ditching Dollar for Euro in Trade

Written by  Published by:Shiite News
Published in Pakistan
Friday, 25 March 2016


The State Bank of Pakistan (SBP) said on Thursday that it is preparing to use euros instead of dollars in trade with Iran.

The Express Tribune quoted the SBP as announcing in a statement that a plan has been prepared to enable Pakistani businessmen to open letters of credit (L/Cs) for imports from Iran in euros instead of dollars.

The policy has been devised because some US sanctions are still in place that could obstruct payments to Tehran, the daily reported.

The SBP has accordingly informed the ministry of commerce and other stakeholders in a recent meeting that it was not possible at this stage to open LCs in dollars in trade with Iran.

If the L/Cs were to be opened in dollars, clearance from US intermediary bank would be needed. This is while certain sanctions are still in place in the US and that would cause trouble for the Pakistani businessmen, added the Express Tribune.

The plan will be discussed together with a series of other economic issues during the Friday visit to Islamabad by Iran’s President Hassan Rouhani.

The SBP announcement follows remarks by a senior US State Department official that international banks will face no trouble if they process Iran transactions that are based on euros.

Chris Backemeyer, Principal Deputy Coordinator for Sanctions Policy at the US Department of State, told reporters in Dubai on Wednesday that Washington would not penalize foreign banks for doing business with Iran in currencies other than the dollar.

Indications have been growing lately that a legacy of hefty fines by the US on banks that are caught for violating Iran sanctions is deterring businesses from trading with the Islamic Republic.

Reuters in a report earlier this week warned that corporate leaders have already become frustrated over this even though the sanctions removal against Iran would have naturally meant the doors are open for investments in Iran.

President Hassan Rouhani is scheduled to visit Islamabad on March 25-26 to discuss trade and economy.

Rouhani will lead a high-ranking economic delegation to Islamabad, including dozens of Iranian traders from private sector.

Ahead of Rouhani’s visit, Pakistani Minister for Commerce Khurram Dastgir Khan directed officials to draft a comprehensive strategy to enhance trade cooperation with the country.

With Iran free of most economic sanctions, potential to strengthen business ties with the neighboring country has increased substantially with many state and private representatives looking to take advantage of the situation.

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