Iranian Rial

[screwball]

On Monday, China to launch yuan's direct trading with Saudi riyal, UAE dirham on its inter-bank foreign exchange market 

2016-09-23 

China to launch yuan's direct trading with Saudi riyal, UAE dirham

BEIJING,  China announced on Friday it will launch direct trading of its currency yuan with the riyal of Saudi Arabia and the dirham of the United Arab Emirates, on its inter-bank foreign exchange market M
onday.

The move will bring the number of foreign currencies that are allowed direct trading with the yuan to 16, according to the China Foreign Exchange Trade System (CFETS).


The CFETS currently announces every business day the central parity rates of the yuan against major currencies including the U.S. dollar, Euro and Japanese yen.

The direct trading will help lower exchange costs and facilitate bilateral trade and investment, the CFETS said.

To promote the global use of the yuan and open up financial markets, China has stepped up the signing of direct trading agreements with several currencies.
http://news.xinhuanet.com/english/2016-09/23/c_135709142.htm

[screwball]

Liang said the SDR inclusion will in the long run boost the market's demand for yuan-based assets, which in turn should beef up the currency's value over time.

On December 11, the central bank's foreign-exchange trading system for the first time released details about the composition of the basket used for setting the yuan's value. The basket includes the U.S. dollar, euro, yen and 10 other currencies. Analysts said the move signaled the central bank's intention to loosen the yuan's peg to the U.S. dollar.

[screwball]

[screwball]

Now to include Saudi ryyial and aue dirham? Is the iran rial in there? 

[screwball]

Further yuan weakness could spill over to other Asian currencies, according to Bank of America, which recommends keeping a close eye on the Japanese yen, Korean won, Taiwan dollar and Malaysian ringgit. CFETS may include the won and the Taiwan dollar in its new index when there are official reference rates for those currencies, according to Khoon Goh, Singapore-based strategist at Australia & New Zealand Banking Group Ltd.

[screwball]

ONLY IF IRAN IS RIGHT! THEY ARE THE ONES THAT SAID IT WE JUST FOUND IT!

ACTIONS ARE DEFINITELY SUPPORTING THESE STATEMENTS FOR SURE BUT WE JUST STUDY ACTIONS!

ACTIONS MEAN THINGS! DOC IMO

BACKDOC » February 13th, 2016

 

THIS IS A VERY INTERESTING ARTICLE TO STUDY!

THE FIRST THING I REALLY NOTICED WAS NOT HOW INCREDIBLE IRANS POTENTIAL FOR GROWTH IS AS IT RE-ENTERS THE WORLD, BUT SOMETHING THAT WAS SAID ABOUT ITS NEIGHBOR.

SAUDI ARABIA HAS A VERY SUBSTANTIAL GDP IN SPITE OF ITS RELIANCE ON OIL AND GAS!

THIS CONFIRMS MY HOPES THAT S.A. COULD HAVE A CURRENCY OF COMPATIBILITY WITH IRAN AND IRAQ!

OF COURSE MR. LONELY WILL TAKE THE STAGE AND GIVE A BOW ONCE ITS DIVERSIFICATION SETS IN!

IRAN THOUGH WILL CERTAINLY BE A PLAYER AS WE CAN SEE HERE.

IT WILL BE A MAJOR COMPETITOR IN THE REGION IF THEY KEEP THEIR NOSE CLEAN!

WHAT I FIND MOST INTERESTING IS HOW UNDERVALUED THEIR PURCHASING POWER IS!

DOWN 70% DUE TO SANCTIONS! WOW!

WHAT AN OPPORTUNITY TO CAPTURE THAT VALUE BY BUYING THEIR CURRENCY BEFORE ITS REPRICED FOR THE NEW REALITY!

TRULY A NO BRAINER! IF CHATTY IRAN IS RIGHT YOU MIGHT NOT HAVE LONG TO DIVERSIFY YOUR CURRENCY PORTFOLIO! DOC IMO

Thunderhawk » February 13th, 2016

 

Iran: disproving fallacies, accepting challenges

Iran’s historic nuclear deal and the lifting of sanctions should bring the country back into the global community.

Oliver Bell, portfolio manager for T. Rowe Price’s Global Frontier Markets Equity Strategy, and Mark Lawrence, investment analyst for frontier and emerging markets, went on a fact-finding mission prior to the lifting of sanctions, Troweprice reported.

The following is part of the report they recently published after their visit:

Our first trip to the country was a real eye-opener and exposed many of our biases as wrong. From the smooth, welcoming breeze through customs, to our three days of one-to-one meetings and excursions outside the hotel, we realized how many of our conceptions were untrue.

In reality, Iran appeared like Turkey—Tehran being a very cosmopolitan city with a much more liberal attitude than we expected, with women appearing fully integrated into society.

Importantly, the country is educated, entrepreneurial and asset rich, but remains cash flow poor because of the sanctions that have been in place since 1979. With those sanctions being lifted, there is much to like as an international investor.

> Economy of Size…

Iran is the second-largest economy in the Middle East and North Africa region after Saudi Arabia, with a GDP of $406.3 billion in 2014 (roughly the same size as Thailand). Its GDP grew by 3% in 2014 after two years of recession, boosted by the President Hassan Rouhani administration's strategy of reform and foreign engagement.

The government has put in place a strategy aiming for an economy unencumbered by sanctions, improved science and technology, reform of some state-owned enterprises, reform of the banking and financial sector, and allocation of oil revenues to policy priorities. Public and quasi-state enterprises dominate.

The World Bank viewed the medium-term outlook as positive if nuclear-related sanctions were eased and the government enacted reform. It sees growth decelerating from 3% in 2014 to 1.9% in 2015 (based on the Iranian calendar year, which runs from March). However, now that sanctions have been lifted before the beginning of the 2016 Iranian calendar year, it projects real GDP could rise to 5.8% in 2016 and 6.7% in 2017.

The International Monetary Fund forecasts real GDP growth of up to 5.5% in 2016-17 and 2017-18, settling at around 3.5% to 4% per annum thereafter.
The IMF sees Iran boosting global oil production by 600,000 barrels per day in 2016, based on the rollback of EU and UN sanctions, rising to 1.2 million bpd over the medium term. That would be equivalent to approximately half of global oil demand growth in 2016.

Inflation has dropped from a peak of 45% in 2012 to the low tens today due to tough monetary policy. We expect interest rates to fall and potentially one more large adjustment in the Iranian rial/dollar exchange rate from the current 35,000-odd rial/dollar.

As banks reconnect to the outside world post-sanctions, capital flows should follow, while oil can only increase its importance within the economy.

> …But in Need of Finance

A number of executives told us that the Iranian government was out of cash and that the country needs to issue more debt. It certainly has a liquidity issue and needs further capabilities in risk management (there are currently no rating agencies) and legal frameworks (bankruptcies and liquidations cannot be easily facilitated) to meet this demand.

Longstanding state involvement combined with several years of sanctions has left the banking sector in a relatively weak state. The banks we met with were heavily exposed to non-core assets in real estate, franchises, equities, etc., probably due to restricted investment alternatives imposed by sanctions.

Compared with other emerging market and Persian Gulf peers, credit penetration is at the higher end of the range at 67%. However, the sector is highly fragmented, with the five largest banks accounting for just one-third of the system assets. This relatively crowded market may help explain the comparatively low profitability, alongside the apparently elevated level of unproductive delinquent loans.

Tehran Stock Exchange features 540 listed companies on the main bourse, $120 billion market cap, $40 billion turnover volume per day and a somewhat staggering 107 brokers. The daily limit up/down is set at 5%. Exchange-traded funds were launched in 2013 and 11 are currently listed on TSE. The index trades at 6x P/E (having been as low as 4x to 5x P/E) and an average dividend yield of 14%.

A huge government-led privatization drive in 2006 put a wide range of corporates back into the private sector. The top 10 listed companies account for 50% of the TSE’s market cap, with seven of those having been registered as part of the government privatization programs.

> A Resourceful Nation

During our visit, it struck us that Iran is already operating pretty well despite sanctions. It has developed smaller-ticket items itself or has shipped from neighboring countries. The shops were fully loaded with goods, many items that you would buy in the West.
Most products are also much cheaper as the Iranian rial has undergone two large devaluations—in 2002 by almost 80% (against the US dollar) and in 2013 by 50%, resulting in the overall real depreciation of 50% since 2000.

Measured on purchasing power parity, the value of the rial is 30% of what is implied by the PPP levels calculated by the IMF (goods are 70% cheaper than the comparable basket in the US.

We believe there is money to be made for first movers coming into the market in early 2016. Longer term, the road looks more uneven and the chances of having stranded investments are just as likely.

The purpose of the trip was to acquaint ourselves with Iran and its idiosyncrasies, which we have done in part but need more time with companies and government officials to become truly comfortable investing.

The banking system does cause concerns as it is undercapitalized and has a high rate of nonperforming loans, and there is no plan for recapitalization yet. However, there is a lot of interest from foreign capital and many of the Iranian banks are already talking to international banks.

The oil and mining sectors dominate the economy and the stock market and is desperate for capital/foreign cooperation. Therefore, there is a narrow, rich seam to play in the stock market, and it may be a crowded trade.

Also, the Islamic Revolution Guards Corps is a major force in the economy, with stakes in a wide network of state-owned and quasi-state businesses and influence in the private sector.

Issues such as business transparency and corruption are also central in the development of any frontier economy. In transparency terms, Transparency International’s 2014 Global Corruption Index ranked Iran 136 out of 175 countries. Meanwhile, in the World Bank’s 2015 Doing Business survey of 189 countries, Iran ranked 130.

Last Great Frontier Market

However, interest in Iran will only grow going forward because of its reintegration into the global economy, its huge hydrocarbon power and its positive demographics (which will be key to future growth prospects).

Iran has also historically been seen as part of the “Next-11” (a term coined by Goldman Sachs) group of countries that have the potential to become significant emerging market economies.

Institutional investors, however, will probably face some challenges in areas of liquidity and corporate governance. Challenges such as these are not uncommon as markets open up and there are always areas for experienced investors to uncover neglected companies with healthy or improving operations.

Ultimately, with a focus on quality, investment in Iran could prove rewarding, especially given the very low valuation starting point. In addition, with Iran being one of the last great frontier markets left to invest in, it could potentially provide one of the final pieces of the investment puzzle for some investors.

(Financial Tribune)

http://www3.irna.ir/en/News/81962513/

BACKDOC » February 13th, 2016

[screwball]

In reality, Iran appeared like Turkey—Tehran being a very cosmopolitan city with a much more liberal attitude than we expected, with women appearing fully integrated into society.

Importantly, the country is educated, entrepreneurial and asset rich, but remains cash flow poor because of the sanctions that have been in place since 1979. With those sanctions being lifted, there is much to like as an international investor.

> Economy of Size…

Iran is the second-largest economy in the Middle East and North Africa region after Saudi Arabia, with a GDP of $406.3 billion in 2014 (roughly the same size as Thailand). Its GDP grew by 3% in 2014 after two years of recession, boosted by the President Hassan Rouhani administration's strategy of reform and foreign engagement.

The government has put in place a strategy aiming for an economy unencumbered by sanctions, improved science and technology, reform of some state-owned enterprises, reform of the banking and financial sector, and allocation of oil revenues to policy priorities. Public and quasi-state enterprises dominate.

The World Bank viewed the medium-term outlook as positive if nuclear-related sanctions were eased and the government enacted reform. It sees growth decelerating from 3% in 2014 to 1.9% in 2015 (based on the Iranian calendar year, which runs from March). However, now that sanctions have been lifted before the beginning of the 2016 Iranian calendar year, it projects real GDP could rise to 5.8% in 2016 and 6.7% in 2017.

The International Monetary Fund forecasts real GDP growth of up to 5.5% in 2016-17 and 2017-18, settling at around 3.5% to 4% per annum thereafter.
The IMF sees Iran boosting global oil production by 600,000 barrels per day in 2016, based on the rollback of EU and UN sanctions, rising to 1.2 million bpd over the medium term. That would be equivalent to approximately half of global oil demand growth in 2016.

Inflation has dropped from a peak of 45% in 2012 to the low tens today due to tough monetary policy. We expect interest rates to fall and potentially one more large adjustment in the Iranian rial/dollar exchange rate from the current 35,000-odd rial/dollar.

As banks reconnect to the outside world post-sanctions, capital flows should follow, while oil can only increase its importance within the economy.

> …But in Need of Finance

A number of executives told us that the Iranian government was out of cash and that the country needs to issue more debt. It certainly has a liquidity issue and needs further capabilities in risk management (there are currently no rating agencies) and legal frameworks (bankruptcies and liquidations cannot be easily facilitated) to meet this demand.

Longstanding state involvement combined with several years of sanctions has left the banking sector in a relatively weak state. The banks we met with were heavily exposed to non-core assets in real estate, franchises, equities, etc., probably due to restricted investment alternatives imposed by sanctions.

Compared with other emerging market and Persian Gulf peers, credit penetration is at the higher end of the range at 67%. However, the sector is highly fragmented, with the five largest banks accounting for just one-third of the system assets. This relatively crowded market may help explain the comparatively low profitability, alongside the apparently elevated level of unproductive delinquent loans.

Tehran Stock Exchange features 540 listed companies on the main bourse, $120 billion market cap, $40 billion turnover volume per day and a somewhat staggering 107 brokers. The daily limit up/down is set at 5%. Exchange-traded funds were launched in 2013 and 11 are currently listed on TSE. The index trades at 6x P/E (having been as low as 4x to 5x P/E) and an average dividend yield of 14%.

A huge government-led privatization drive in 2006 put a wide range of corporates back into the private sector. The top 10 listed companies account for 50% of the TSE’s market cap, with seven of those having been registered as part of the government privatization programs.

> A Resourceful Nation

During our visit, it struck us that Iran is already operating pretty well despite sanctions. It has developed smaller-ticket items itself or has shipped from neighboring countries. The shops were fully loaded with goods, many items that you would buy in the West.
Most products are also much cheaper as the Iranian rial has undergone two large devaluations—in 2002 by almost 80% (against the US dollar) and in 2013 by 50%, resulting in the overall real depreciation of 50% since 2000.

Measured on purchasing power parity, the value of the rial is 30% of what is implied by the PPP levels calculated by the IMF (goods are 70% cheaper than the comparable basket in the US.

We believe there is money to be made for first movers coming into the market in early 2016. Longer term, the road looks more uneven and the chances of having stranded investments are just as likely.

The purpose of the trip was to acquaint ourselves with Iran and its idiosyncrasies, which we have done in part but need more time with companies and government officials to become truly comfortable investing.

The banking system does cause concerns as it is undercapitalized and has a high rate of nonperforming loans, and there is no plan for recapitalization yet. However, there is a lot of interest from foreign capital and many of the Iranian banks are already talking to international banks.

The oil and mining sectors dominate the economy and the stock market and is desperate for capital/foreign cooperation. Therefore, there is a narrow, rich seam to play in the stock market, and it may be a crowded trade.

Also, the Islamic Revolution Guards Corps is a major force in the economy, with stakes in a wide network of state-owned and quasi-state businesses and influence in the private sector.

Issues such as business transparency and corruption are also central in the development of any frontier economy. In transparency terms, Transparency International’s 2014 Global Corruption Index ranked Iran 136 out of 175 countries. Meanwhile, in the World Bank’s 2015 Doing Business survey of 189 countries, Iran ranked 130.

Last Great Frontier Market

However, interest in Iran will only grow going forward because of its reintegration into the global economy, its huge hydrocarbon power and its positive demographics (which will be key to future growth prospects).

Iran has also historically been seen as part of the “Next-11” (a term coined by Goldman Sachs) group of countries that have the potential to become significant emerging market economies.

Institutional investors, however, will probably face some challenges in areas of liquidity and corporate governance. Challenges such as these are not uncommon as markets open up and there are always areas for experienced investors to uncover neglected companies with healthy or improving operations.

Ultimately, with a focus on quality, investment in Iran could prove rewarding, especially given the very low valuation starting point. In addition, with Iran being one of the last great frontier markets left to invest in, it could potentially provide one of the final pieces of the investment puzzle for some investors.

(Financial Tribune)

http://www3.irna.ir/en/News/81962513/

BACKDOC » February 13th, 2016

 

YES WE KNOW YOU'RE IN A HURRY TO SHOW OFF CHINA! (see article below)

EVEN THOUGH YOU WILL BE POWERFUL THE NEW ASSET BACKED CURRENCY WILL BE SAVED FOR LAST!

ALL OTHER ASSET BACKED CURRENCIES WILL START TO SHOW UP BUT WHEN THE US UNVEILS ITS POWER THE WORLD WILL SHUTTER! DOC IMO

Mountainman » February 13th, 2016

 

YES.......This Is PROOF THINGS have been Going On BEHIND and IN FRONT of CLOSED/OPEN Doors........IMO......??? "

Thunderhawk » February 13th, 2016

 

Chinese put out billboard ads announcing renminbi as new world currency



When I arrived to Bangkok the other day, coming down the motorway from the airport I saw a huge billboard—and it floored me, reports Sovereignman.

The billboard was from the Bank of China. It said: “RMB: New Choice; The World Currency”

Given that the Bank of China is more than 70% owned by the government of the People’s Republic of China, I find this very significant.

It means that China is literally advertising its currency overseas, and it’s making sure that everyone landing at one of the world’s busiest airports sees it. They know that the future belongs to them and they’re flaunting it.

And it’s true. The renminbi’s importance in global trade and as a reserve currency is increasing exponentially, with renminbi trading hubs popping up all over the world, from Singapore to London to Geneva to Frankfurt to Toronto.

Multinational companies such as McDonald’s are now issuing bonds in renminbi, and even sovereign governments are issuing debt denominated in renminbi, including the UK.

Almost every major global player out there, be it governments or major multinationals, is positioning itself for the renminbi to become the dominant reserve currency.

But here’s the thing. Nothing goes up and down in a straight line. And China is in deep trouble right now. The economy is slowing down and the enormous debt bubble is starting to burst.

A lot of people, including the richest man in Asia, are starting to move their money out of the country.

So while the long-term trend is pretty clear – China becoming the dominant economic and financial superpower – the short-term is going to look incredibly rocky.

We talk about this in today’s short podcast with Sovereign Man’s Chief Investment Strategist, Tim Staermose, which includes a few ways to actually make money from China’s short-term unwinding.

http://www.dhakatribune.com/2016/feb/14 ... d-currency

BACKDOC » February 13th, 2016

 

WELL, WHEN YOU CHANGE CURRENCY VALUE LIKE THEY JUST DID WE WILL SEE A SERIOUS MARKET MOVER FOR SURE LIKE I SAID! WOW!

Thunderhawk » February 13th, 2016

 

China 'catch-up' sell-off expected after Lunar New Year holiday ends

Markets are bracing for a "catch-up" sell-off by Chinese traders as the world's second-largest economy resumes trading on Monday.

A week's break for Chinese Lunar New Year could have been a week of reprieve for financial markets, which have been speculating wildly on Chinese currency devaluation and demand.

Instead, last week saw savage sell-offs in global banking stocks, and continued volatility.

Asian shares performed miserably and this risk-off sentiment is likely to channel through to Chinese markets, says research by Credit Suisse.

The Nikkei 225 slumped 11 per cent last week, and Hong Kong's Hang Seng Index (tightly correlated to the mainland's movements) reopened after a three-day New Year break down 3.85 per cent. CSI300 futures are pointing to a drop of 20 points.

"Under such a turbulent environment, combined with the Chinese stock market's own plunges in January, Monday's reopening may bring in heavy volatility to Chinese stocks," said Renee Mu, currency analyst at DailyFX.

Aussie stocks are set to open higher after the rally in US and European stocks on Friday, led by financials and miners. But with such large declines globally over the week, a rocky start to Chinese trading could put pressure on Australian stocks.

"Given the Australian market is predominantly banks and miners, expect a strong open locally," said Matt Felsman, private wealth adviser at APP Securities.

"However, with such declines globally last week, we wait as China may need to play "catch-up", which could dampen our enthusiasm."
Yuan strength questioned

During the holiday week, the Chinese offshore yuan performed well, strengthening 0.51 per cent against the US dollar due to a smaller than expected drop in China's foreign currency reserves, combined with US Federal Reserve boss Janet Yellen's testimony that negative interest rates are not out of the question.

But Heng Koon How, senior currency strategist with Credit Suisse, thinks investor sentiment will remain negative towards the world's second-largest economy.

"We think this offshore yuan strength is overdone; Chinese mainland equities will likely see a heavy correction lower when the market reopens on Monday and that will lead to offshore yuan weakness," Mr Heng said.

"In addition, the latest $US99.5 billion contraction in China's foreign reserves for January will likely keep global investors concerned over ongoing capital outflows from China. We reiterate our negative view of both the offshore yuan and onshore yuan and see a return in weakness next week."

With US and Canadian markets closed on Monday for a national holiday, Japanese GDP and industrial production figures will dominate the news cycle. Analysts expect fourth-quarter Japanese GDP estimates to show a quarter-on-quarter growth rate of -0.3 per cent. Investors will also be keenly watching Chinese trade figures for January, released on Tuesday, for evidence the decline in exports and imports may be moderating.

However Kathy Lien, managing director fo FX strategy at BK Asset Management, said Chinese authorities could help smooth market jitters.
"The government could help shore up confidence by tweaking the data to show less weakness or more strength," she said in a note.

http://www.smh.com.au/business/china/ch ... mtnqb.html

Thunderhawk » February 13th, 2016

 

Backdoc Alert

Dy oil minister: NIOC ships 4 million barrels oil for Europe

Managing Director of National Iranian Oil Company (NIOC) Rokneddin Javadi said on Saturday that some four million barrels of Iran's crude oil will be shipped for Europe by the next 24 hours.

He said that two million barrels has been purchased by French Total Company and the other two million barrels by two Russian and Spanish companies.

Javadi said that the Russian company will ship oil to its refinery in Romania.

Iran had already declared that in post-sanctions era will increase its oil export in two phases one million bpd.

Petroleum Minister Bijan Zangeneh said following his visit to Italy and France that contract to sell 160,000 barrels crude oil to Total will be executed on February 16, 2016.

He called Italian Oil Companies of Eni and Saras as traditional customers of Iranian oil, which will purchase oil in post-sanctions era.
Iran intends to offer discount to retake its European share from rivals.

Before intensification of sanctions, Iran exported 500,000 bpd oil to Europe, which later it reduced to 100,000 bpd.

http://www3.irna.ir/en/News/81962280/

Mountainman » February 13th, 2016

 

You know HAWK......I feel VERY FORTUNATE to be A part of WHAT and WHY We are SEEING the MARKETS/GLOBAL REALITY Unfold......

It is SURREAL for Me.....EVERYONE Here for ALL The INPUT/OUTPUT......and FRANK/ALL Teams......."GENERATIONS" Will THANK YOU......And MOST of Them/Us Will HELP Many!!!!!!!!

Thunderhawk » February 13th, 2016

 

ON BEHALF OF DOC AND MYSELF

WE HOPE YOU FOUND THIS SESSION HELPFUL

WE WILL CONTINUE TO SHARE ALL WE FIND

AND GIVE OUR ANALYSIS TO THE BEST OF OUR ABILITIES.

I WOULD LIKE TO THANK FRANK FOR MAKING US A PART OF THIS AMAZING TEAM

WE ARE HONORED AND HUMBLED TO BE HERE

THANK YOU ALL

Blessings in Christ

ThunderHawk

[screwball]

https://www.rt.com/business/218315-china-russia-ruble-yuan/

 

[screwball]

Iran, South Korea to establish joint trade desk

News ID: 3777614 - Sat 24 September 2016 - 19:08

Economy

TEHRAN, Sep. 24 (MNA) – Head of Iran’s Trade Promotion Organization and CEO of KOTRA have agreed to establish Tehran and Seoul joint trade desk.

Mojtaba Khosrowtaj and Kim Jaehong, President and CEO of KOTRA (Korean Trade-Investment Promotion Agency) met in Seoul on Saturday to address possibilities of preparing a framework for joint cooperation of Iranian and Korean firms. Mr. Khosrowtaj leads a delegation of tradesmen and entrepreneurs to South Korea and had reportedly agreed with Mr. Kim of Korean KOTRA in establishing of a joint desk with primary mission of promoting Korean brand names in Iran and marketing goods with Korean brand names; “a reciprocal mission for Korean companies will also be promoting Iranian products in their domestic markets and to incorporate Iranian industrial spare parts in production,” Khosrowtaj told reporters.

“Joint investments in molding industry in production of household appliances has been an area well forgotten, and immediate policy decisions should address this gap. Policies for a more sustainable economic relations are necessary; Korean companies with an interest in Iran should follow such policies,” he added, “a trade desk will be established to introduce to tradesmen of both sides capacities and to address their concerns and needs.”

 

SH/3777390

[screwball]

SEOUL, Feb. 2 (Yonhap) -- South Korea and Iran agreed to maintain the current won-based settlement system while seeking an alternative payment method that can further promote bilateral trade and investment, the government said Tuesday.

Following recent talks held in Tehran, the finance ministry said the oil-rich country agreed to hold onto two Korean won accounts it has maintained over the years.

The move comes after the international community lifted its blanket sanctions imposed on Iran early this year as the country pledged to freeze its nuclear program

The two sides also discussed ways to use the euro, Chinese yuan and Japanese yen to create another medium for payment and clearance.

Officials from the finance and foreign ministries held talks with Iran's central bank representatives. Woori and the Industrial Bank of Korea (IBK), which control the Iranian accounts, were present at the gathering.

These bank accounts that contain some 3 trillion won (US$2.49 billion) are owned by Iran and were created in September 2010 to bypass trade restrictions and allow the two sides to conduct trade, without violating the embargo.

Under this system, a South Korean refinery could purchase crude from Iran and deposit the money either into the Woori or IBK accounts. Iran's central bank would confirm the transfer and give the Iranian seller rial, which then concluded the transaction.

"Since South Korean companies bought more than they sold to Iran, the amount of money in the accounts has grown steadily over the years," a ministry source said.

The source, meanwhile, said talks on creating other forms of payment system were not concluded at the meeting.

"Iran has considerable trade with Europe so they prefer using the euro as a medium of trade," the official said. He said more talks will take place in the future on this matter.

On some media reports that Iran wanted to convert the won it held in its accounts into another currency, the insider said that the amount mentioned is very small.

"Iran naturally wanted to make more money out of the money it held, but the total it was to convert is way too small to actually affect the won-based settlement system," he claimed.

 

[screwball]

The two sides also discussed ways to use the euro, Chinese yuan and Japanese yen to create another medium for payment and clearance.

[screwball]

China’s Central Bank has started a global payment system which provides cross-border transactions in yuan. 

The China International Payment System (CIPS) intends to internationalize the yuan and challenge the US dollar's dominance.

“The establishment of CIPS is an important milestone in yuan internationalization, providing the infrastructure that will connect global yuan users through one single system,” Helen Wong, greater China chief executive at HSBC, was cited as saying by the Financial Times.

CIPS will accept payments in cross-border trade, direct investments, financing and personal remittances. The system is open for operations 11 hours a day. The first CIPS transaction was completed by Standard Chartered Bank for Sweden's IKEA.

Nineteen banks have been authorized to use CIPS; eight of them are Chinese subsidiaries of foreign banks, including Citi, Deutsche Bank, HSBC and ANZ.

Prior to launching CIPS international, transfers in Chinese currency could be carried out mostly through offshore clearing banks in Hong Kong, Singapore or London. 

While the procedure was slow and costly, the new system is expected to significantly reduce the cost and time for money transfers.

China is also trying to reduce its reliance on the global transaction services organization SWIFT.

[screwball]

So now that's swift, target 2'and chips are all working and connected...

[screwball]

You would think that China would add iran to their forex pairs as it will be a major trading partner!

[screwball]

Just need that single forex rate come on baby! Bring it bring it! 

[gregp]

You're on fire, screwball !!!  Thank you !!!

[millionaire in training]

Thanks  SB ........ EXCELLENT  .  You are on fire......   

[pokerplayer]

1 minute ago, millionaire in training said:

Thanks  SB ........ EXCELLENT  .  You are on fire......   

Yes he is MIT, I honestly believe the Riel will RV sooner than the dinar.

pp

[millionaire in training]

I think there's more money to be made (for us as investors) withe the Rial than with the IQD.  The Rial is cheeper to by therefor you get more for your money.

 

[millionaire in training]

4 minutes ago, pokerplayer said:

Yes he is MIT, I honestly believe the Riel will RV sooner than the dinar.

pp

I think the IQD will go first and the Rial will follow.  This is my opinion from what I research .  IQD is on the verge and it's being very quiet about it. It will surprise everyone.

[pokerplayer]

Absolutely agree with you there. While I don't have numerous millions like some, I am very comfortable with what I do have and even at a dime I will be set for life.

pp

[pokerplayer]

1 minute ago, millionaire in training said:

I think the IQD will go first and the Rial will follow.  This is my opinion from what I research .  IQD is on the verge and it's being very quiet about it. It will surprise everyone.

I can work with that idea ! Hope your hunch is right !  :0P

pp

[millionaire in training]

This is such a life changing situation.   It's unbelievable that we're a part of it. How lucky are we.

[pokerplayer]

Yes it is ! I've had IQD for 13 years and while my faith in it has diminished a little over the years, I am still positive about it. Some have laughed at me, but a good number have bought in as well. We will see who gets the last laugh once it RV's and we are set.

Won't rub any nose's in it as that's not who I am, but you can bet many will sure wish they got in !

JMHO, pp

Edited September 25, 2016 by pokerplayer

[screwball]

2 hours ago, millionaire in training said:

I think there's more money to be made (for us as investors) withe the Rial than with the IQD.  The Rial is cheeper to by therefor you get more for your money.

 

Definitely more!....