Iran, India agree to replace dollar partially with rupee in trade deals

March 12, 2012 - 15:28
Tehran (Platts)-- Iran and India have agreed to boost bilateral trade and replace the dollar partially with the rupee in their transactions as Tehran seeks to bypass unfair sanctions.
The state television website quoted Iran's deputy foreign minister for western Asia affairs Ahmad Sobhani as saying that the two countries planned to increase the share of the rupee in bilateral trade.
"At the moment, we have around $12 billion worth of trade exchanges with India," Sobhani was quoted as saying on the sidelines of a meeting between a visiting 70-member Indian trade delegation and Iranian commercial and banking institutions.
"Some part of the exchanges will be directly in rupees and this will be beneficial for both the two countries," he added.
"It has been said that the two countries' trade will reach $25 billion in the next four years. I believe this will happen earlier," Sobhani said.
"We are looking for a solution to use any currency that would be in our interest and not cause problems. The rupee is one of those [currencies]," he added.
The agency quoted Sobhani as saying "by replacing the dollar with the rupee many middle channels in Iran-India trade will be removed."
The move to replace the dollar partially with the rupee in India-Iran trade bolsters an agreement between India and Iran last month to accept 45% of payment in rupees for Iran's oil exports to India and to allow an Iranian bank to set up a branch in Mumbai.
Separately, Yahya Al-e Eshagh, head of the Tehran Chamber of Commerce, Industries and Mines, said there was no shortage of countries willing to trade with Iran. "But the process of foreign currency transfers has caused some problems in commercial trades," he added.
The Fars news agency quoted Rafeeq Ahmed, president of the government-backed Federation of Indian Exports, as saying: "Despite the imposition of the Western sanctions against Iran, India still considers Iran as a reliable trade partner.
"Therefore, the two countries agreed that India pays for 45% of Iran's oil exports in rupees. Iran's Bank Parsian and the Indian UCO agreed to cooperate in this area," Ahmed said.
Fars also quoted an unnamed representative of the Indian central bank as saying that the bank would arrange for the private Bank Parsian to open a branch in Mumbai.
Last month, Iran reached agreement with India to accept 45% of payment in rupees for its oil exports, which have been running at 370,000 b/d but may now be cut as a result of US pressure on Asian buyers of Iranian crude oil to cut their purchases of Iranian oil.
The governor of Iran's Central Bank, Mahmoud Bahmani said last month that Iran would even welcome payment in gold instead of hard currency from its trading partners.