Iran and Turkey have started implementing a deal finalized by the two neighboring countries last year to use their national currencies in mutual trade with the first letter of credit being opened by Bank Melli Iran on Monday.
According to Central Bank of Iran, as part of the agreement to use Iranian rial and Turkish lira between the two countries’ central banks, Bank Melli opened the first such L/C on April 16 to finance Iranian trade with Turkey, CBI’s website reported.
Turkey and Iran’s central banks formally agreed in October to trade in their local currencies. The agreement had been discussed earlier during Iranian President Hassan Rouhani’s visit to Turkey followed by a draft agreement between the governors of the two countries’ central banks.
Under the deal, the Iranian rial and Turkish lira will be easily converted to help reduce the costs of currency conversion and transfer for traders. The countries had been using euros in the past, as Iran is barred from using the US financial system.