Russia and Iran have officially stopped using the US dollar for trade between their countries, switching entirely to their own national currencies—the Russian ruble and the Iranian rial. This major shift, confirmed by Mohammad-Reza Farzin, the Governor of the Central Bank of Iran (CBI), marks a bold move to sidestep US-led sanctions and strengthen their economic ties.
A Plan to Counter “Unjust Sanctions”
Speaking at the 11th Conference on Modern Banking and Payment Systems in Tehran, Farzin explained that the decision is part of a larger plan to counter what he called “unjust sanctions.” These sanctions have targeted both countries in recent years, forcing them to find ways to bypass the global financial systems dominated by the West.
“We have reached a currency agreement with Russia and abandoned the dollar. From now on, all our trade is conducted in rubles and rials,” Farzin announced, as reported by Fars News.
A Long-Term Strategy Comes to Life
The idea of ditching the dollar in bilateral trade isn’t new for these two countries. Back in July 2022, Iran and Russia revealed their intentions to move away from the dollar. By December of the same year, they finalized an agreement to use their national currencies instead.
This deal allows businesses and banks in both countries to use alternative financial platforms that don’t rely on SWIFT, the US-controlled global banking network. In addition, both nations agreed on a fixed exchange rate to simplify their trade transactions.
A Breakthrough in Payment Systems
Another milestone in this collaboration is the integration of the two countries’ payment systems. Iran’s Shetab system is now connected to Russia’s Mir system, which means that travelers from either country can use their domestic debit cards for purchases abroad. This convenience could soon extend to other international partners if Iran adopts Russia’s Mir payment system more widely.
Building Stronger Ties Amid Sanctions
Faced with pressure from Western sanctions, Russia and Iran have been working closely to build a robust economic partnership. Their efforts are paying off—trade between the two nations grew by 12.4% in the first eight months of this year, surpassing $4 billion in 2023.
Iran isn’t stopping there. It’s also enhancing cooperation within the BRICS economic bloc, which now includes new members like Egypt, Ethiopia, and the UAE. By joining forces with these countries, Iran hopes to further reduce its dependence on Western-controlled financial systems.
A Challenge to the Dollar’s Dominance
The decision by Russia and Iran to abandon the dollar is not just about trade; it’s a symbolic challenge to the dominance of the US dollar in global markets. By forging their own path, they aim to create a financial system that better serves their interests, free from the influence of Western sanctions.
This bold move signals a growing trend among countries seeking alternatives to the US-dominated financial order. Could this be the start of a new era in global trade? Only time will tell.
