Friday, February 3, 2017

BREAKING Iran To Drop US Dollar In Response To Trump’s Travel Ban

Iran central bank governor Valiollah Seif
Following President Donald Trump’s ban on travelers from seven predominantly Muslim countries, the Iranian government announced it would stop using the U.S. dollar “as its currency of choice in its financial and foreign exchange reports,” the local Financial Tribune reported.

Iran governor Valiollah Seif’s central bank announced the decision in a television interview on January 29. The change will take effect on March 21, and it will impact all official financial and foreign exchange reports.

“Iran’s difficulties [in dealing] with the dollar,” Seif said, “were in place from the time of the primary sanctions and this trend is continuing,” but when it comes to other currencies, he added, “we face no limitations.”

According to Seif, who also heads the Money and Credit Council, the central bank has embarked on the process because Iran conducts the lion's share of its trade deals with the EU, China and the UAE. This leaves the country with the two options of "selecting a basket of currencies or choosing the currency that plays the biggest part in foreign trade".

Seif said that the US dollar makes up a meager portion of the country's foreign trade.

Seif gave strong hints that the country may opt for euro in releasing its key economic reports.

Although trade with US is small (Its most important trading partner is the UAE, which accounts for around 24% of all Iranian imports and exports. China is not far behind with 22%, followed by Turkey, India and the EU, all of which account for around 6% of Iran’s trade.) oil is generally priced in US dollars. The Trump administration is not likely to be happy with the Iranian move away from the oil-dollar tradition.


(ht WeAreChange)


  1. What's the problem with Iran deciding not to use the US dollar for some of their trading?

    They are free to choose, aren't they?

    1. Freedom is not tolerated with the US government.

    2. They are free to choose, however...

      RW may disagree with this, but the problem for the US is that if other countries follow suit -- especially China (whom Trump is also "attacking") -- the US Dollar may, effectively, lose it's reserve-currency status.

      A lot of what has allowed the Fed to print money unhindered is the fact that around half of all US Dollars are used for trading goods completely outside the US. This has kept inflation (at least in a CPI-style manner) "somewhat" in check because the goods and services represented by US-dollar-transactions has been large and increasing.

      If the dollar loses its reserve-currency status, suddenly all those dollars wind up flooding back into the US, creating massive inflation.

      Gary North says this will not happen, but I'm not so sure.

  2. As I understand it, having the U.S. dollar as the "reserve currency" helps hide the Fed's out of control money creation. If countries stopped using it, then the monetary inflation turns more quickly into price inflation.

    At least, I think that's the idea.

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