The Central Bank of Iran (CBI) has approved the issuance of letters of credit (L/Cs) in Iranian rials in a bid to diversify trade exchanges and maintain the value of the domestic currency.

The announcement is the latest in a string of measures to support L/Cs introduced by Iranian authorities charged with improving the country's cross-border trading prospects.

Neighbours only

According to local media sources, Iran's banks have been informed of the approval of rial-denominated L/Cs by a CBI circular distributed in June.

It says that L/Cs issued in rials will only be applicable to goods imported from or through neighbouring countries.

L/C support

Iran reckons to have significantly improved trade balances with very many countries, due in part to government interventions to support L/Cs for Iranian businesses. (DC World News 6 September 2005)

In 2004, the Export Guarantee Fund of Iran (EGFI) said it would support L/Cs for trade with Iraq (DC World News 12 August 2004) and South Africa (DC World News 30 December 2004). In 2005 the EGFI said it would support L/Cs to boost trade between Iran and Pakistan (DC World News 8 August 2005).

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.