TEHRAN- In a move to increase bilateral trade, the central banks of Iran and Turkey signed a deal to trade in their local currencies.

The document was signed on Thursday by Central Bank of Iran Governor Valiollah Seif and his Turkish counterpart Murat Çetinkaya during the trip of Iranian First Vice-President Es’haq Jahangiri to Turkey.

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.

The deal allocates a credit line of 5 billion liras and its equal amount in Iranian rials. It would be used to facilitate the proceedings for the opening of letters of credit by merchants on both sides of the border.   

“Trading with local currencies is the most significant step to improving economic ties. The central banks of both countries agreed on this issue and they will inform other banks about how the deal will be applied,” Reuters quoted Turkish Prime Minister Binali Yildirim as saying in a joint news conference with Jahangiri.

“Trading in local currencies will be encouraged and this will contribute to making trading easier and increase the trade volume and diversity,” Yildirim added.

Earlier this month, Turkish President Tayyip Erdogan said the deal was aimed at raising Turkish-Iranian trade volume to $30 billion from current $10 billion.

MA