21 April 2018
The first letter of credit (LC) has been opened, Using the monetary contract/ currency swap agreement of the Iranian Rial and Turkish Lira to finance trade with Turkey.
TEHRAN (CBI PR dept) – Bank Melli Iran has put concluding monetary treaties/ currency swap with major trading parties on its agenda, aiming to facilitate trade with neighboring countries, conducting foreign exchange operations of real and legal entities with the banking system, using international payment tools, as well as a reduction in the risk of foreign exchange operations in recent years. BMI pursues such goals consistently.
In accordance with the signing of a swap agreement of the Iranian Rial and Turkish Lira between the central banks of Iran and Turkey and the subsequent administrative arrangements, Bank Melli Iran opened the first letter of credit to finance trade with Turkey on April 16, 2018.
It should be noted that there is no need for a third currency such as the US dollar or Euro in this model to settle foreign exchange. By using this method, all purchases, transfers and financial transactions have been transferred to the banking system through currency operations and the risk of business operations between the two countries will be minimized. Moreover, according to the executive arrangement of this model, the credits for Iranian merchants are nominated in Turkish lira and will be provided from the sources of currency swap contracts.
Regarding the high volume of trade with Turkey of about six billion dollars, using national currencies under the executive arrangements of currency swap will contribute significantly to facilitating banking and commercial ties between the two countries.
It is worth mentioning that following the visit of the Turkish president to Iran last year with the aim of creating the necessary conditions for expanding the trade and economic ties between the two countries and, subsequently, during the visit paid by the governor of the central bank of Iran to Turkey, the Memorandum of Understanding (MOU) of the Bilateral Rial- Lira swap was agreed and approved by the governors of both central banks.