Tehran, Iran, October 20
By Mehdi Sepahvand –- Trend:
The central banks of Iran and Turkey on Friday signed a deal to enable the two countries’ banks to swap their national currencies, the rial and lira.
According to the agreement, the two countries have assigned a total credit line of 5 billion Turkish liras and its equivalent amount in the Iranian rials to the operating banks of the two countries, which will be used to open letters of credit for the merchants of the two countries with a one-year maturity.
Iran and Turkey have ramped up efforts to boost bilateral trade since the implementation of the Joint Comprehensive Plan of Action (JCPOA), a nuclear deal between Iran and the Group 5+1 (Russia, China, the US, Britain, France and Germany).
Although the banking agreement is hoped to facilitate trade between the two countries, it is worth noting that the side which exports more to the other country will make the real gain, a banking expert told Trend Oct. 20.
It is not clear if, for example, the export of Iranian gas to Turkey is covered by the agreement, Hossein Salimi noted, adding that if Iran wishes to benefit from the deal, it should boost its export to Turkey.
If exports cannot match imports, then a deficiency of currency will follow, Salimi said.
In 2016, Iran’s imports from Turkey amounted to $4.9 billion, while exports were worth $4.6 billion.
Following President Recep Tayyip Erdogan’s Oct. 4 visit to Tehran, the central banks of the two countries signed a swap agreement, which amounts to a mutual commitment on exchanging national currencies.
The deal implementing the agreement was signed during a trip to Turkey by Iran’s First Vice-President Es'haq Jahangiri.
Trade turnover between Iran and Turkey in the first quarter of 2017 amounted to $3.5 billion.