Iranian Economic War?

Could this be the opening salvo in the economic war between Iran and America? We believe it is, and could start a trend of other countries, including China, to being reinvesting their foreign reserves in currencies other than the dollar. This article fresh from Tehran.

TEHRAN – Iran has decided to replace dollar with euro in its foreign trade given the continual impediments and hostile policies directed by U.S. toward the country, Iranian finance minister said on Monday.

According to ISNA, the would-be decision is also more attuned to existing trade volume between Iran and European nations, the country’s major economic partners, which is transacted through the ‘euro banks’. “Such inclination has been underlying part of our economic policy for awhile and our Oil Stabilization Fund (OSF) in dollar is at its lowest now,” Davud Danesh-Jafari continued.

Back in September, the head of the Central Bank of Iran (CBI) Ebrahim Sheibani had threatened that Iran would resort to dollar-to-euro conversion if the U.S. pressure continued. Moreover, the 9/11 event seemed to consolidate a tentative unanimity being formed on this matter among Iranian statesmen after the emergence of euro in 2000.

Experts believe that less reliance on dollar and conversion to euro may increase Iran’s financial flexibility and access to euro accounts would be easier if the U.S. chooses to impose a unilateral economic sanction on the country.

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