Importance of Maintaining
Euro for Iran Transactions
The 90-day and 180-day US sanctions were among issues that affected the
Iranian economy to some extent in recent months. After withdrawal from the
nuclear agreement with Iran known as the Joint Comprehensive Plan of Action
(JCPOA), the US president tried to push the European Union member states to
join Washington in its anti-Iran sanctions. Even during the UN General
Assembly in September, the Trump administration officially warned against
any economic cooperation with Iran.
Regarding the decisions made in the last negotiations between Iran and 4+1
group, Europe has formulated a package in support of Iran to ease the
effects of the US sanctions, and Iran has moved towards the elimination of
the USD and its replacement with euro in its transactions. The US dollar is
a powerful international currency, but today the euro is also gaining
strength. Despite pressures by Trump, European countries continue to deal in
the EU currency with Iran and are set to buy a certain amount of oil from
Iran. A logical relationship with the EU could lead to a continued decline
in the rate of foreign exchange. All countries of the world, including
China, Japan, Korea, Russia, India, etc. conduct their transactions in euro
By using the powerful euro Iran can manage its trading conditions. By using
monetary and financial instruments, we should prevent the exchange rate from
rising again. Iran is an importer of raw materials and goods. Hard currency
at reasonable and real rates will make imports cheaper and increase the
Central Bank of Iranís reserves. The traditional non-oil exports of Iran,
ranging from carpets and nuts have been harmed due to the policy of
insisting on stabilization of the exchange rate in recent years. Because the
minimum cost of producing these items has increased significantly.
Inflationary pressures and its compensation from the rising price of the
foreign currency had forced exporters to effectively lose their competitive
ability. Although under the Ahmadinejad administration a forex leap occurred
that could be used as an opportunity to boost exports, it was lost because
Ahmadinejad had no plans and overlooked the 40 percent inflation impact.
In order to increase the rate of economic growth, reduce unemployment and
increase national income, the government should consider exports and by
adopting appropriate foreign exchange and trade policies, boost the
competitiveness of exporters in foreign markets and by setting standards and
laboratories and encouraging investment in suitable packaging for export
products, increase the share of non-oil exports from total exports.
Insistence on stabilizing the exchange rate with state intervention is an
act without economic logic; in the meantime, instability and its daily
growth will destabilize any kind of business.
that domestic production does not meet demand and raw materials and
machinery and capital goods are imported an increase in exchange rates would
not reduce imports and even increase exports. The economic conditions of
Iran must be taken into account in this regard. The shock of eliminating the
US dollar is definitely manageable if the European Union cooperates and this
is the responsibility of the private sector of the economy and the
diplomatic machine to keep the corridor open.