Iran has switched from the U.S. dollar to the euro as its official reporting foreign currency, state media reported on Wednesday, April 18.

The decision was taken in a cabinet meeting as the government tries to manage the exchange rates and support the plunging rial. (Reporting by Bozorgmehr Sharafedin Editing by Andrew Heavens) </s> TEHRAN (Tasnim) – The Iranian cabinet on Wednesday approved a plan to replace the US dollar with euro in reporting foreign currency amounts.

During a meeting chaired by Iranian President Hassan Rouhani in Tehran on Wednesday, the cabinet obliged all ministries, and governmental organizations and companies to use euro instead of US dollar as the main foreign currency in their statistical repots and financial data.

During the meeting, the Central Bank of Iran (CBI) was also obliged to announce and manage the value of the Iranian rial against euro on a regular basis. </s> Iran’s central bank will dump the dollar and “manage” its local currency using primarily the euro, a state-run news agency reported, amid a deepening confrontation with the U.S.

President Hassan Rouhani and his cabinet decided Wednesday that the euro will also be used when giving the rial’s exchange rate in all official statements and accounts, Iranian Students’ News Agency cited a government statement as saying. It didn’t say when the decision would come into effect.

Tensions between the Islamic Republic and the U.S. have spiked since the beginning of the Trump presidency, which wants to roll back Iranian influence in the Middle East with the assistance of America’s Gulf Arab allies. President Donald Trump has set a May 12 deadline for his decision whether to pull out of the 2015 nuclear deal that allowed Iran’s economy to re-engage with world trade. European powers want to preserve the accord.

Iranian officials want to wean the country’s businesses away from trading with the dollar, which is still subject to primary sanctions enforced by Washington.

Leaders have pointed the finger at enemies overseas in recent days as they rolled out urgent measures to contain a currency crisis that’s seen the rial plummet to a series of record lows. On Wednesday, Supreme Leader Ayatollah Ali Khamenei joined in, saying the “footprints of foreign intelligence” agencies had played a role in the currency slump. </s> Tehran, Iran - The government of Iran has announced plans to replace the US dollar with the euro in official financial reporting, according to state-run media.

The move on Wednesday is seen as part of efforts to circumvent restrictions on accessing the US currency amid tensions with Washington, as well as prevent market instability generated due to fluctuations in the value of Iranian rial against the dollar.

In a cabinet meeting, the government decided that all ministries, state organisations and companies should report based on a euro-rial exchange rate, which the Central Bank of Iran will be tasked to report frequently, state-run IRNA news agency said.

It was not clear when the decision would become effective, but business owners said they awaited for the new policies to take effect.

"I assume if they use euro as the official currency, this will reduce the psychological impact of fluctuations of rial against the dollar," Newsha Sheikh Soleimani, a Tehran-based importer of raw materials for the tile and ceramic industry, told Al Jazeera.

"Our company trades mostly in euro, but still some of the invoices are issued based on rial-dollar exchange rate."

She said her firm had recently put on hold all transactions amid uncertainty over the value of foreign currency.

"I welcome any move to bring back stability to the foreign exchange market."

Valiollah Seif, the Central Bank chief, had earlier said it is not "logical" to use the dollar in financial reporting.

Iran's trade revenues are obtained mostly in euro due to sanctions on the US dollar, he said. Therefore, added Seif, the country's financial reports should use a reference currency that is more stable and widely used in trade.

As part of Iran's 2015 nuclear deal with the world powers, all sanctions related to Iran's controversial nuclear programme were lifted.

Nevertheless, due mostly to lingering tensions with the US, limitations still remain on Iran's access to the US currency.

These restrictions have contributed to a fall in the value of rial against the dollar in the past months.

Each dollar was traded for an all-time high of 60,000 rials last week, triggering serious concern among Iranians over the stability that President Hassan Rouhani had brought to the economy by controlling the foreign exchange rates.

Since summer last year, rial has lost roughly 50 percent of its value against the US currency, which some Iranians buy in large numbers as an investment at times of economic uncertainty.

A sudden decline in rial's value is expected to result in an increase in the price of imported goods and push up the inflation rate.

To control the currency crisis, the government last week froze the free market trading of the US currency by introducing an official rate of 42,000 rials for each dollar.

The Central Bank said it will only provide dollars for registered consumers for specific purposes, while free trading of the foreign currency would be deemed illegal.

Seif, the Central Bank chief, faced furious legislators last week when he took the parliamentary podium to explain the new forex policies.

He said he suggested to the Supreme Leader Ayatollah Ali Khamenei that the country should use the euro in foreign trade instead of the US dollar.

Meanwhile, a currency trader told Al Jazeera that the new policies are "good news for importers and exporters", but added that there was still a lot of uncertainty, which has created confusion for his business.

"Even if the government does officially replace the dollar with the euro, still the dollar is traded and invested in by many in the free market," he said, preferring to stay anonymous.

"I hope these decisions are not just temporary measures - as if short-term remedies to reduce a fever - as international restrictions on the dollar affect our economic stability."

There have been mounting concerns among Iranian businesses over a possible withdrawal of the US from Iran's nuclear deal.

US President Donald Trump is expected to decide by May 12 whether his administration will re-impose sanctions lifted as part of the nuclear pact.

He believes the deal is flawed as it does not address Iran’s missile programme, as well as its military presence in the region.

Iran says its missiles are for defence purposes. </s> LONDON (Reuters) - Iran will start reporting foreign currency amounts in euros rather than U.S. dollars, state media said on Wednesday as part of the country’s effort to reduce its reliance on the U.S. currency due to political tension with Washington.

U.S. Dollar and Euro notes are seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration

The new policy could encourage government bodies and firms linked to the state to increase their use of the euro at the expense of the dollar.

Central bank governor Valiollah Seif said last week that Supreme Leader Ayatollah Ali Khamenei had welcomed his suggestion of replacing the dollar with the euro in foreign trade, as the “dollar has no place in our transactions today”.

Tehran has been trying for years to move away from the dollar, although much of the country’s international trade is still conducted in dollars and ordinary Iranians use them for travel and savings.

U.S. President Donald Trump has threatened to exit a 2015 nuclear deal Iran made with world powers unless it is revised. U.S. sanctions will resume unless Trump issues new “waivers” to suspend them on May 12.

Bank transactions involving the dollar are already difficult for Iran because legal risks make U.S. banks unwilling to do business with Tehran. Foreign firms can be exposed to sanctions if they do Iranian deals in dollars, even if the operations involve non-U.S. branches.

As a result, France will start offering euro-denominated credits to Iranian buyers of its goods later this year to keep its trade out of reach of U.S. sanctions, the head of state-owned French investment bank Bpifrance said in February.

The threat of U.S. sanctions has destabilised Iran’s foreign exchange market in recent months.

The rial lost close to half its value on the free market between last September and last week, sinking to a record low of about 60,000 against the dollar before authorities set a fixed rate of 42,000 and warned Iranians they would face penalties for using other rates.

Khamenei on Wednesday blamed foreign enemies for the “recent issues in the currency market” and asked Iran’s intelligence services to defuse the plots against the Islamic Republic.

Police spokesman Saeed Montazer al-Mahdi was also quoted by ISNA saying that 39 currency exchangers have been arrested “for disrupting the market” and 80 unlicensed currency exchange shops have been shut down in recent days. </s> LONDON, April 18 (Reuters) - Iranian government institutions will start reporting foreign currency amounts in euros rather than U.S. dollars, state media said on Wednesday as part of the country’s effort to reduce its reliance on the American currency.

The decision was made at a cabinet meeting, state broadcaster IRIB said.

Central bank governor Valiollah Seif said last week that Supreme Leader Ayatollah Ali Khamenei had welcomed his suggestion to replace the dollar with the euro in Iran’s foreign trade, as “dollar has no place in our transactions today”.

Tehran has been trying for years to move away from the dollar because of political tensions with Washington, although much of the country’s international trade is still conducted in dollars and ordinary Iranians use them for travel and savings.

U.S. President Donald Trump has threatened to exit a 2015 nuclear deal Iran made with world powers unless it is revised. U.S. sanctions will resume unless Trump issues new “waivers” to suspend them on May 12.

Bank transactions involving the dollar are already difficult for Iran because legal risks make U.S. banks unwilling to do business with Tehran. Foreign firms can be exposed to sanctions if they do Iranian deals in dollars, even if the operations involve non-U.S. branches.

As a result, France will start offering euro-denominated credits to Iranian buyers of its goods later this year to keep its trade out of reach of U.S. sanctions, the head of state-owned French investment bank Bpifrance said in February.

The threat of U.S. sanctions has destabilised Iran’s foreign exchange market in recent months. The rial lost close to half its value on the free market between last September and last week, sinking to a record low of about 60,000 against the dollar before authorities set a fixed rate of 42,000 and warned Iranians they would face penalties for using other rates. (Reporting by Bozorgmehr Sharafedin Editing by Andrew Torchia and Matthew Mpoke Bigg) </s> “All ministries, governmental organizations and firms are obliged to choose euro as the main currency used in reporting and publishing statistics, information and financial data,” read a Farsi statement published on the Iranian government’s website on Wednesday.

The decision was made at a meeting of the Cabinet on Wednesday, apparently in response to what Iranian officials describe as an economic plot hatched by the US and its allies to decrease the value of the Iranian currency rial.

The currency had lost close to half of its value on the free market since September before authorities implemented a plan to unify official and free-market exchange rates for the rial in favour of a single rate set at 42,000 against the US dollar last week.

Moreover, the Central Bank of Iran clamped a 10,000-euro ($12,400) ceiling on the amount of foreign currency that citizens can hold outside banks.

Some analysts blame threats by US President Donald Trump that he will return US sanctions on Iran unless the so-called flaws of the 2015 nuclear deal are fixed.

The deadline for Trump administration to extend Iran sanctions waivers is May 12. The US refusal to keep sanctions frozen will mean the US is longer bound by the pact.

However, Iranian officials blame plots of foreign adversaries for the problem.

The bill must be approved by the Iranian parliament and the Guardian Council before going into effect. </s> Six years after SWIFT cut ties with Iranian banks during the last round of Western sanctions on the Persian nation, on Thursday afternoon the U.S. took another step toward cutting Iran off from the global economy when the US Treasury announced it was levying sanctions on a financing network and accusing the country’s central bank of helping funnel U.S. dollars to the blacklisted elite military unit of the Iranian Revolutionary Guard known as the Quds Force, the WSJ reported.

Acting together with the United Arab Emirates, the US Treasury said that it had sanctioned six individuals and three "front companies engaged in a large-scale currency exchange network that has procured and transferred hundreds of millions" of dollars to Iran's elite military force; overnight Israel’s government blamed the the same Quds Force for rocket attacks from Syria Wednesday night, an action that triggered massive retaliatory strikes by Israel’s military against Iranian targets in Syria, escalating the risk of a wider regional war.

In Washington, Treasury Secretary Steven T. Mnuchin accused "the Iranian regime and its Central Bank" of misusing banking access in the UAE to acquire US dollars to fund the IRGC-QF's "malign activities, and to arm its "regional proxy groups." The new sanctions also ban US individuals and entities from doing business with the currency network.

Mnuchin alleged that the sanctioned entities had concealed the acquisition of funds and transfers: "We are intent on cutting off IRGC revenue streams wherever their source and whatever their destination."

“Countries around the world must be vigilant against Iran’s efforts to exploit their financial institutions to exchange currency and fund nefarious actions of the IRGC-QF and the world’s largest state sponsor of terror,” Mnuchin also said.

Specifically, the Treasury accused an Iranian company, Jenah Aras Kish, of being a front for the Quds Force, and said the firm received oil revenues from Central Bank of Iran accounts and gave that money to couriers who exchanged it for millions of U.S. dollar notes in the U.A.E. through two Iranian firms, Khedmati & Co. and Rashed Exchange.

Washington has repeatedly accused the Iran Revolutionary Guard of backing terrorist groups and militias affiliated with Iran, including in Lebanon and Syria where missile warfare involving Israel and allegedly Al Quds unfolded on Thursday.

In February 2015, Reuters reported that at least $1 billion in cash had been smuggled into Iran despite US and other sanctions. In that case, the cash passed through money changers and front companies in Dubai, in the UAE, and Iraq. As we further reported in December 2015, the smuggling ring used gold as the key commodity used to bypass borders and monetary barriers, as well as middlemen in Turkey and the UAE where the chain of accountability led to the very top echelons of government in both nations.

The Treasury also accused Iran's central bank of being "complicit" in supplying the IRGC.

Thursday's actions foreshadow the return of U.S. economic penalties as Washington reimposes sanctions that had been lifted as part of the 2015 nuclear agreement. Iran’s central bank wasn’t formally sanctioned in Thursday’s actions, but will be in the coming months, at which point the entire nations will once again be blacklisted by SWIFT, making USD-based international transactions impossible.

And while Thursday’s action targets only one network, it is a model of how the administration plans to implement a complete ban on dealings with the Central Bank of Iran and dollar transactions coming due in the months ahead.

Incidentally, this time around, SWIFT may not need to even get involved. “There are secondary sanctions consequences for doing business with these entities,” said the Treasury’s under secretary for terrorism and financial intelligence, Sigal Mandelker, referring to the currency-exchange network. Secondary sanctions are actions against companies that interact with blacklisted entities.

Because of Trump’s decision to reimpose broad U.S. sanctions, the use of U.S. dollar banknotes by Iran is banned after August, “and you can expect that we’re going to take that authority very seriously,” she said. “Foreign financial institutions, governments all over the world need to be on high alert to make sure that they understand the pattern and practice that these networks use to try to gain access to the USD.”

Meanwhile, western governments and companies - many of whom disagreed with Trump's withdrawing from the nuclear deal, have been trying to figure out how aggressively Washington plans to enforce its new sanctions regime against Iran, "wary of Treasury sanctioning European bank and firms, for example, if they continue to do business with Iran beyond deadlines for compliance approaching over the next six months."

For now, European officials have said they plan to stay in the nuclear deal with Iran, which may not only give license to their companies to maintain ties to Iran, but also may be setting up a diplomatic rift between the U.S. and its closest allies.

However, if and when the US imposes a few multi-billion fines on European banks, any willingness the EU has to bypass Trump's sanctions will promptly evaporate. Furthermore, Europe "doesn’t have the power to take important decisions," said Alaeddin Boroujerdi, head of the Iranian parliament’s nation security and foreign policy committee. The "Europeans, by sanctioning Iran, seek to dance in front of the Americans."

As a result, it's only a matter of time before Iran finds itself locked out financially from the world.

Or rather the Western world, because as the US and Europe fade away as key partners for Iran, China is about to step in again.

As Bloomberg reported today, "to develop its $430 billion economy, Iran is being forced to rely on political allies in the east. Trade with China has more than doubled since 2006, to $28 billion. The biggest chunk of Iran’s oil exports go to China, about $11 billion a year at current prices."

China is “already the winner,’’ Dina Esfandiary, a fellow at the Centre for Science and Security Studies at King’s College in London, told Bloomberg. "Iran has slowly abandoned the idea of being open to the West. The Chinese have been in Iran for the past 30 years. They have the contacts, the guys on the ground, the links to the local banks.’"

And they’re more willing to defy U.S. pressure as Trump slaps sanctions back on.

In short, the more Trump pushes Iran - and the broader middle-eastern region - to comply with the will of Israel and Saudi Arabia, the closer Iran will get with China whose influence in the middle-east, where it is ideologically aligned with Russia, will only grow... </s> TEHRAN: Iran's currency is continuing its downward spiral amid a deepening economic crisis and the imminent return of full US sanctions.The Iranian rial fell to 1,12,000 to the dollar on Sunday, from 98,000 to $1 on Saturday. The government-set exchange rate was 44,070 to the dollar, compared to 35,186 on January 1.The rial has lost half its value against the dollar in just four months, having broken through the 50,000-mark for the first time in March.The government attempted to fix the rate at 42,000 in April, and threatened to crackdown on black market traders.But the trade continued with Iranians worried about a prolonged economic downturn turning to dollars as a safe way to store their savings, or as an investment in the hope the rial will continue to drop.With banks often refusing to sell their dollars at the artificially low rate, the government was forced to soften its line in June, allowing more flexibility for certain groups of importers.The handling of the crisis was one of the reasons behind last week's decision by President Hassan Rouhani to replace central bank chief, Valiollah Seif.The currency collapse was encouraged by the US announcement in May that it was pulling out of the 2015 nuclear deal, that lifted certain sanctions in exchange for curbs to Iran's atomic programme.The US is set to reimpose its full range of sanctions in two stages on August 6 and November 4, forcing many foreign firms to cut off business with Iran.
Iran's central bank officially switches from using the U.S. dollar to the euro in its international transactions.