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The governments of Russia and Iran are starting to phase out the usage of the U.S. dollar to conduct bilateral trade settlements. Russian Deputy Prime Minister Alexander Novak stated that 80% of Russia-Iran trade transactions are settled using national currencies and that they are considering also the usage of the Chinese yuan.

80% of Russia-Iran Trade Settlements Involve National Currencies

Russian and Iran have started to phase out the usage of the U.S. dollar in their bilateral trade settlements. According to Russian Deputy Prime Minister Alexander Novak, the call to use national currencies, including the Russian ruble and the Iranian rial, has been effective, leaving only a small amount of these transactions still relying on the U.S. dollar.

After meeting with Iranian officials, Novak stated:

We discussed these issues in great detail today, and both the Ministry of Finance and the Bank of Russia were present, as were our Iranian counterparts. I believe approximately 80% of our mutual settlements are in national currencies: rials and rubles.

Furthermore, Novak stated that the two countries were considering the usage of other third-party currencies to settle their bilateral transactions, including the Chinese yuan, a currency already widely used by the Russian Federation.

A Push to Ditch the U.S. Dollar

Novak also referred to the low utilization of traditional settlement currencies, including the U.S. dollar and the euro, stating that less than 20% of transactions involved settlements using them. “The work that was purposefully carried out in order to switch to national currencies has its results,” he stated.

Both Iran and Russia are currently facing economic sanctions enacted by the U.S. government that make difficult the use of the dollar for completing transactions using the traditional finance system. This has resulted in a complete change of the payment mechanics in international trade transactions, with the two countries seeking to adopt alternatives.

Recently, Iranian President Ebrahim Raisi ordered the Central Bank of Iran to lay the groundwork for ditching the U.S. dollar completely from its trade transactions and switching to the Iranian rial and national currencies. In the same way, Russia has supported the shift to using national currencies and the Chinese yuan for this same purpose.

In January, it was reported that both countries were discussing the possibility of the issuance of a gold-backed stablecoin to be used for international settlements, but Russian officials stated this discussion would have to be postponed until the approval of a clear cryptocurrency legal framework.

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