Iran Looking to Replace Dollar With Dinar in $10 Billion Trade With Iraq

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Iran’s government considers employing the Iraqi dinar in bilateral trade with Iraq in a bid to further curtail the dominance of the U.S. dollar. The annual turnover between the two neighboring nations exceeds $10 billion with millions of pilgrims and health tourists crossing the border each year.

Iran and Iraq Can Reduce Dollar Dominance by Using Dinar in Trade, Official Says

The government in Tehran is pushing for wider use of national currencies in foreign trade and is viewing the Iraqi dinar as an alternative to the dollar in transactions with Bagdad, regional media reported. Replacing the U.S. currency with the dinar in bilateral trade between Iran and Iraq would weaken the dollar’s supremacy, according to an Iranian official.

Speaking to Iran’s Mehr News Agency, the head of the Iran-Iraq Chamber of Commerce, Yehya Eshaq, made it clear that the transition to dealing in national fiats is a priority for the current Iranian government. “Most countries in the world are looking for breaking the American hegemony in their exchanges, and the use of national currencies can help accelerate this process,” Eshaq said and added:

By favoring the dinar over the dollar in trade operations with Iraq, we are actively undermining the dollar’s dominance in our import-export transactions as part of a wider governmental strategy.

Also quoted by the Shafaq news agency in Iraq, Eshaq pointed out that transacting in national currencies can speed up the ongoing shift away from U.S. control on global trade, a trend which, in his opinion, is gaining traction.

The annual exchange of goods and services between the two neighboring nations currently amounts to more than $10 billion, the Iranian official highlighted. “The adaptation of a trade system pivoting on the national currencies of the two nations would further cement these relations and galvanize more robust trade ties,” he elaborated.

Iran and Iraq should be able to reduce the dominance of the dollar by maximizing trade exchanges with their national currencies, Yehya Eshaq emphasized, adding that both nations can benefit from this move and proper follow-up steps.

Eshaq’s statements follow recent remarks by Iran’s President Ebrahim Raisi who stressed the need for de-dollarization. Speaking during the virtual summit of the Shanghai Cooperation Organization’s Council of Heads of State earlier this week, he stated that any attempt to shape a fair international system requires the removal of the U.S. dollar as an “instrument of dominance in intra-regional relations.”

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