What is behind Iran-Russia de-dollarization deal as sanctions bite?

A correspondent in Tehran

Dec 30, 2023

Russian President Vladimir Putin and Iran's President Ebrahim Raisi hold a meeting in Tehran on July 19, 2022. - Iran's president will host his Russian and Turkish counterparts for talks on the Syrian war in a three-way summit overshadowed by fallout from the Russian invasion of Ukraine. (Photo by Sergei SAVOSTYANOV / SPUTNIK / AFP) (Photo by SERGEI SAVOSTYANOV/SPUTNIK/AFP via Getty Images) — Russian President Vladimir Putin and Iran's President Ebrahim Raisi hold a meeting in Tehran on July 19, 2022. - Iran's president will host his Russian and Turkish counterparts for talks on the Syrian war in a three-way summit overshadowed by fallout from the Russian invasion of Ukraine. — SERGEI SAVOSTYANOV/SPUTNIK/AFP via Getty Images

TEHRAN — Tehran said it had finalized an agreement with Moscow to eliminate the US dollar from bilateral trade, according to a statement from the Central Bank of Iran (CBI) on Wednesday.

The agreement was signed between the CBI Governor Mohammad-Reza Farzin and his Russian counterpart Elvira Nabiullina in Moscow.

Hailed in Tehran as a "new chapter" in banking relations, the deal will see the Iranian and Russia national currencies (the rial and the ruble) replacing the US dollar in transactions between the two pariah states.

Iran has for long been disconnected from international banking due to sanctions imposed by the United States and other major powers. Russia was thrust into a similar state after its invasion of Ukraine in February 2022 and has since been scrambling for alternatives by forging new alliances.