LONDON (Reuters) - Iran will start reporting foreign currency amounts in euros rather than U.S. dollars, state media said on Wednesday as part of the country’s effort to reduce its reliance on the U.S. currency due to political tension with Washington.

U.S. Dollar and Euro notes are seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration

The new policy could encourage government bodies and firms linked to the state to increase their use of the euro at the expense of the dollar.

Central bank governor Valiollah Seif said last week that Supreme Leader Ayatollah Ali Khamenei had welcomed his suggestion of replacing the dollar with the euro in foreign trade, as the “dollar has no place in our transactions today”.

Tehran has been trying for years to move away from the dollar, although much of the country’s international trade is still conducted in dollars and ordinary Iranians use them for travel and savings.

U.S. President Donald Trump has threatened to exit a 2015 nuclear deal Iran made with world powers unless it is revised. U.S. sanctions will resume unless Trump issues new “waivers” to suspend them on May 12.

Bank transactions involving the dollar are already difficult for Iran because legal risks make U.S. banks unwilling to do business with Tehran. Foreign firms can be exposed to sanctions if they do Iranian deals in dollars, even if the operations involve non-U.S. branches.

As a result, France will start offering euro-denominated credits to Iranian buyers of its goods later this year to keep its trade out of reach of U.S. sanctions, the head of state-owned French investment bank Bpifrance said in February.

The threat of U.S. sanctions has destabilised Iran’s foreign exchange market in recent months.

The rial lost close to half its value on the free market between last September and last week, sinking to a record low of about 60,000 against the dollar before authorities set a fixed rate of 42,000 and warned Iranians they would face penalties for using other rates.

Khamenei on Wednesday blamed foreign enemies for the “recent issues in the currency market” and asked Iran’s intelligence services to defuse the plots against the Islamic Republic.

Police spokesman Saeed Montazer al-Mahdi was also quoted by ISNA saying that 39 currency exchangers have been arrested “for disrupting the market” and 80 unlicensed currency exchange shops have been shut down in recent days.</s>Iran has switched from the U.S. dollar to the euro as its official reporting foreign currency, state media reported on Wednesday, April 18.

The decision was taken in a cabinet meeting as the government tries to manage the exchange rates and support the plunging rial. (Reporting by Bozorgmehr Sharafedin Editing by Andrew Heavens)</s>LONDON, April 18 (Reuters) - Iranian government institutions will start reporting foreign currency amounts in euros rather than U.S. dollars, state media said on Wednesday as part of the country’s effort to reduce its reliance on the American currency.

The decision was made at a cabinet meeting, state broadcaster IRIB said.

Central bank governor Valiollah Seif said last week that Supreme Leader Ayatollah Ali Khamenei had welcomed his suggestion to replace the dollar with the euro in Iran’s foreign trade, as “dollar has no place in our transactions today”.

Tehran has been trying for years to move away from the dollar because of political tensions with Washington, although much of the country’s international trade is still conducted in dollars and ordinary Iranians use them for travel and savings.

U.S. President Donald Trump has threatened to exit a 2015 nuclear deal Iran made with world powers unless it is revised. U.S. sanctions will resume unless Trump issues new “waivers” to suspend them on May 12.

Bank transactions involving the dollar are already difficult for Iran because legal risks make U.S. banks unwilling to do business with Tehran. Foreign firms can be exposed to sanctions if they do Iranian deals in dollars, even if the operations involve non-U.S. branches.

As a result, France will start offering euro-denominated credits to Iranian buyers of its goods later this year to keep its trade out of reach of U.S. sanctions, the head of state-owned French investment bank Bpifrance said in February.

The threat of U.S. sanctions has destabilised Iran’s foreign exchange market in recent months. The rial lost close to half its value on the free market between last September and last week, sinking to a record low of about 60,000 against the dollar before authorities set a fixed rate of 42,000 and warned Iranians they would face penalties for using other rates. (Reporting by Bozorgmehr Sharafedin Editing by Andrew Torchia and Matthew Mpoke Bigg)</s>“All ministries, governmental organizations and firms are obliged to choose euro as the main currency used in reporting and publishing statistics, information and financial data,” read a Farsi statement published on the Iranian government’s website on Wednesday.

The decision was made at a meeting of the Cabinet on Wednesday, apparently in response to what Iranian officials describe as an economic plot hatched by the US and its allies to decrease the value of the Iranian currency rial.

The currency had lost close to half of its value on the free market since September before authorities implemented a plan to unify official and free-market exchange rates for the rial in favour of a single rate set at 42,000 against the US dollar last week.

Moreover, the Central Bank of Iran clamped a 10,000-euro ($12,400) ceiling on the amount of foreign currency that citizens can hold outside banks.

Some analysts blame threats by US President Donald Trump that he will return US sanctions on Iran unless the so-called flaws of the 2015 nuclear deal are fixed.

The deadline for Trump administration to extend Iran sanctions waivers is May 12. The US refusal to keep sanctions frozen will mean the US is longer bound by the pact.

However, Iranian officials blame plots of foreign adversaries for the problem.

The bill must be approved by the Iranian parliament and the Guardian Council before going into effect.</s>Tehran, Iran - The government of Iran has announced plans to replace the US dollar with the euro in official financial reporting, according to state-run media.

The move on Wednesday is seen as part of efforts to circumvent restrictions on accessing the US currency amid tensions with Washington, as well as prevent market instability generated due to fluctuations in the value of Iranian rial against the dollar.

In a cabinet meeting, the government decided that all ministries, state organisations and companies should report based on a euro-rial exchange rate, which the Central Bank of Iran will be tasked to report frequently, state-run IRNA news agency said.

It was not clear when the decision would become effective, but business owners said they awaited for the new policies to take effect.

"I assume if they use euro as the official currency, this will reduce the psychological impact of fluctuations of rial against the dollar," Newsha Sheikh Soleimani, a Tehran-based importer of raw materials for the tile and ceramic industry, told Al Jazeera.

"Our company trades mostly in euro, but still some of the invoices are issued based on rial-dollar exchange rate."

She said her firm had recently put on hold all transactions amid uncertainty over the value of foreign currency.

"I welcome any move to bring back stability to the foreign exchange market."

Valiollah Seif, the Central Bank chief, had earlier said it is not "logical" to use the dollar in financial reporting.

Iran's trade revenues are obtained mostly in euro due to sanctions on the US dollar, he said. Therefore, added Seif, the country's financial reports should use a reference currency that is more stable and widely used in trade.

As part of Iran's 2015 nuclear deal with the world powers, all sanctions related to Iran's controversial nuclear programme were lifted.

Nevertheless, due mostly to lingering tensions with the US, limitations still remain on Iran's access to the US currency.

These restrictions have contributed to a fall in the value of rial against the dollar in the past months.

Each dollar was traded for an all-time high of 60,000 rials last week, triggering serious concern among Iranians over the stability that President Hassan Rouhani had brought to the economy by controlling the foreign exchange rates.

Since summer last year, rial has lost roughly 50 percent of its value against the US currency, which some Iranians buy in large numbers as an investment at times of economic uncertainty.

A sudden decline in rial's value is expected to result in an increase in the price of imported goods and push up the inflation rate.

To control the currency crisis, the government last week froze the free market trading of the US currency by introducing an official rate of 42,000 rials for each dollar.

The Central Bank said it will only provide dollars for registered consumers for specific purposes, while free trading of the foreign currency would be deemed illegal.

Seif, the Central Bank chief, faced furious legislators last week when he took the parliamentary podium to explain the new forex policies.

He said he suggested to the Supreme Leader Ayatollah Ali Khamenei that the country should use the euro in foreign trade instead of the US dollar.

Meanwhile, a currency trader told Al Jazeera that the new policies are "good news for importers and exporters", but added that there was still a lot of uncertainty, which has created confusion for his business.

"Even if the government does officially replace the dollar with the euro, still the dollar is traded and invested in by many in the free market," he said, preferring to stay anonymous.

"I hope these decisions are not just temporary measures - as if short-term remedies to reduce a fever - as international restrictions on the dollar affect our economic stability."

There have been mounting concerns among Iranian businesses over a possible withdrawal of the US from Iran's nuclear deal.

US President Donald Trump is expected to decide by May 12 whether his administration will re-impose sanctions lifted as part of the nuclear pact.

He believes the deal is flawed as it does not address Iran’s missile programme, as well as its military presence in the region.

Iran says its missiles are for defence purposes.</s>TEHRAN (Tasnim) – The Iranian cabinet on Wednesday approved a plan to replace the US dollar with euro in reporting foreign currency amounts.

During a meeting chaired by Iranian President Hassan Rouhani in Tehran on Wednesday, the cabinet obliged all ministries, and governmental organizations and companies to use euro instead of US dollar as the main foreign currency in their statistical repots and financial data.

During the meeting, the Central Bank of Iran (CBI) was also obliged to announce and manage the value of the Iranian rial against euro on a regular basis.</s>Iran’s central bank will dump the dollar and “manage” its local currency using primarily the euro, a state-run news agency reported, amid a deepening confrontation with the U.S.

President Hassan Rouhani and his cabinet decided Wednesday that the euro will also be used when giving the rial’s exchange rate in all official statements and accounts, Iranian Students’ News Agency cited a government statement as saying. It didn’t say when the decision would come into effect.

Tensions between the Islamic Republic and the U.S. have spiked since the beginning of the Trump presidency, which wants to roll back Iranian influence in the Middle East with the assistance of America’s Gulf Arab allies. President Donald Trump has set a May 12 deadline for his decision whether to pull out of the 2015 nuclear deal that allowed Iran’s economy to re-engage with world trade. European powers want to preserve the accord.

Iranian officials want to wean the country’s businesses away from trading with the dollar, which is still subject to primary sanctions enforced by Washington.

Leaders have pointed the finger at enemies overseas in recent days as they rolled out urgent measures to contain a currency crisis that’s seen the rial plummet to a series of record lows. On Wednesday, Supreme Leader Ayatollah Ali Khamenei joined in, saying the “footprints of foreign intelligence” agencies had played a role in the currency slump.</s>LONDON (Reuters) - The euro edged back towards $1.24 on Thursday as investors shrugged off a rise in long-term U.S. bond yields and sold the dollar.

The Swiss franc fell to within a whisker of the 1.20 per euro mark it last hit in January 2015 - before the Swiss National Bank removed its currency peg and the franc shot up.

The dollar had initially risen in Asian trading although the increase was limited given the scale of gains in the 10-year Treasury note yield, which climbed more than 5 basis points overnight for its biggest one-day surge since March 2.

Broad uncertainty stemming from U.S. President Donald Trump’s trade and economic policies, as well as geopolitical posturing in the Middle East and elsewhere has made financial markets more volatile over the past month and weighed on the dollar.

But a rally in the euro, which had gained at the start of this year, has run out of steam and analysts said most major currencies remained stuck in trading ranges until there was more clarity about when central banks would tighten monetary policy.

“Yes the euro has been gradually gaining but this is mostly because of the dollar,” said Thu Lan Nguyen, who attributed recent dollar weakness to political uncertainty in the U.S. rather than interest rate differentials.

“The ECB (European Central Bank) has been quite dovish recently. Rate expectations have come down in the euro zone and went up in the U.S. It’s not supportive for the euro’s strength.”

The euro rose 0.1 percent to $1.2387 after earlier hitting $1.24. The dollar slipped 0.1 percent against a basket of currencies to 89.576.

Diverging interest rate views have driven the spread between U.S. and German 10-year government bond yields above 230 basis points, the highest since late December 2016.

The euro had weakened to a 14-year low the last time the yield spread was at the current width. But it has been relatively immune to the current yield spread widening. The spread has increased more than 30 basis points over the past three months, but the common currency has moved within a relatively narrow $1.2556-$1.2154 range.

Turkey’s lira fell after rallying more than 2 percent against the dollar overnight after the country’s president Tayyip Erdogan called for elections to be held in June, more than a year earlier than planned.

The lira was supported as Erdogan’s call for early elections was seen as the government’s recognition for the need for tighter monetary policy to combat inflation.

The lira was last down 0.5 percent at 4.029 against the dollar, with the previous day’s surge moving it significantly away from a record low of 4.194 set last week.

Battered by concerns over monetary policy and inflation, the lira is one of the worst-performing emerging market currencies so far this year.

A rally in commodity prices, including large moves in oil and iron ore, helped the Australian dollar rise even after disappointing jobs data. The Aussie dollar was up 0.2 percent at $0.7799, having recovered from a low of $0.7765.

The Canadian dollar was another big mover, having slid 0.6 percent against the dollar after the Bank of Canada did not sound as hawkish as some had anticipated.

“We maintain the same view held before this meeting; the BoC wants to raise rates in July and left the door wide open but we doubt that data will allow them to walk through it,” wrote strategists at Rabobank.

The loonie rose slightly to C$1.2614 per dollar.</s>LONDON (Reuters) - The euro briefly flirted with $1.24 on Thursday but a rise in long-term U.S. bond yields supported the dollar and pushed the single currency further back into its recent trading range.

Given the scale of gains in the 10-year Treasury note yield US10YT=RR, which climbed more than 5 basis points overnight for its biggest one-day surge since March 2, the dollar’s strength was limited.

The modest moves underlined investor caution and that a rally in the euro, which gained at the start of this year, has run out of steam. Investors are growing nervous that the euro zone economy’s rebound is nearing the top and the European Central Bank may move more slowly to tighten monetary policy.

Broad uncertainty stemming from U.S. President Donald Trump’s trade and economic policies, as well as geopolitical events in the Middle East and elsewhere has meanwhile weighed on the dollar.

“There is no real impulse from monetary policy. There is a little bit of fatigue with the trade war issue and the global economic cycle is losing momentum, especially in the euro zone whereas the U.S. is holding up,” said Christin Tuxen, an FX strategist at Danske Bank.

The euro fell 0.1 percent to $1.2365 EUR= after earlier hitting $1.24. The dollar index, measuring the U.S. currency against a basket of currencies, traded flat at 89.644 .DXY.

Tuxen remains bullish on the euro, seeing the single currency rise towards $1.30 in 12 months but said in the short-term the euro could fall as the ECB, which meets next week, takes more time in raising rates.

With the U.S. Federal Reserve tightening, diverging interest rate views have driven the spread between U.S. and German 10-year government bond yields above 230 basis points, the highest since late December 2016.

The euro had weakened to a 14-year low the last time the yield spread was at the current width. But it has been relatively immune to the current yield spread widening. The spread has increased more than 30 basis points over the past three months, but the common currency has moved within a relatively narrow $1.2556-$1.2154 range.

“While we have been arguing that the dollar will take its cue from the U.S. economic cycle – irrespective of what the Fed does – we do believe that the outlook for global asset prices in general now rests on what U.S. monetary officials choose to do next,” ING analysts said.

The Swiss franc EURCHF= fell to within a whisker of the 1.20 per euro mark it last hit in January 2015 - before the Swiss National Bank removed its currency peg and the franc shot up.

Expectations the SNB will refrain from reining in its balance sheet even when the ECB acts has pushed the franc lower. The franc touched 1.9999 francs per euro earlier on Thursday before recovering to 1.1977.

Turkey’s lira, one of the worst performing currencies in recent months, fell after rallying more than 2 percent against the dollar overnight after President Tayyip Erdogan called early elections for in June, more than a year earlier than planned.

Erdogan’s early election call was seen by some market players as recognition of the need for tighter monetary policy to combat inflation.

The lira fell 0.5 percent at 4.0285 against the dollar TRYTOM=D3. Wednesday's surge moved it significantly away from a record low of 4.194 set last week.

A rally in commodity prices, including large moves in oil and iron ore, helped the Australian dollar rise even after disappointing jobs data. The Aussie dollar AUD=D4 was up 0.1 percent at $0.7793, having recovered from a low of $0.7765.</s>The Dollar shrugged off early modest losses in holiday-thinned Asian trading on Monday, while solid European inflation data underpinned the Euro.

Several markets across Asia and Europe were closed for the May Day holiday. Tokyo markets will be closed for three days from Wednesday for a string of holidays known as Golden Week, and many investors take additional time off.

The dollar index, which tracks the greenback against a basket of six rival currencies, edged up 0.1 percent to 99.144.

Bolstering dollar sentiment, U.S. congressional negotiators have hammered out a bipartisan agreement on a spending package to keep the federal government funded through the end of the current fiscal year on Sept. 30, a senior congressional aide said on Sunday.

The House of Representatives and the Senate must approve the deal before the end of Friday and send it to President Donald Trump for his signature to avoid the first government shutdown since 2013.

“It is hard for markets to make big moves with holidays in so many places today, and people are just waiting for more information to come out,” said Harumi Taguchi, principal economist at IHS Markit in Tokyo.

Against its Japanese counterpart, the dollar nudged 0.1 percent higher to 111.68.

U.S. Labor Department data on Friday showed private wages and salaries accelerated 0.9 percent in the first quarter to mark the largest increase in 10 years, suggesting the U.S. Federal Reserve might still hike interest rates two more times this year.

The firm wage growth helped offset news on Friday that the U.S. economy grew at its weakest pace in three years in the first quarter as consumer spending almost stalled.

“Dollar/yen is holding up, despite the weaker U.S. GDP,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, as U.S. Treasury yields rose.

The yield on benchmark 10-year Treasury notes was at 2.298 percent in Asian trading, up from its U.S. close of 2.282 percent on Friday.

But market participants continued to watch for any developments around North Korea, limiting losses for the perceived safe-haven yen.

On Sunday, U.S. President Donald Trump increased diplomatic contacts with allies in Asia to secure their cooperation to pressure North Korea over its nuclear bomb and missile programs.

The Fed will meet on Wednesday this week, with no policy change expected, while the U.S. employment report for April will be issued on Friday.

The euro was steady on the day at $1.0894, underpinned by solid euro zone inflation figures on Friday that analysts said could prompt the European Central Bank to take a more hawkish tone in its June statements.

Official flash estimates put euro zone inflation at 1.9 percent in the first quarter, above estimates of 1.8 percent. The ECB’s target is below but close to 2 percent.

Short positioning in euro eased in the week ended April 25, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday, after independent centrist Emmanuel Macron came out ahead of anti-European Union rightist Marine Le Pen in the first round of the French election last weekend. The runoff vote will be held on Sunday.

Meanwhile, net shorts on the Canadian dollar that week ballooned to 42,642 contracts, the largest since early February 2016 as the United States worked to renegotiate the terms of its NAFTA deal with Canada and Mexico.

The dollar edged up 0.1 percent against the Canadian dollar on Monday to C$1.3673 after logging a 14-month high of C$1.3697 on Friday.

The Australian dollar inched down slightly to $0.7484, moving back toward last week’s low of $0.7440, which was its weakest since mid-January. It posted a loss of 1.8 percent in April, the largest monthly loss this year.

The Reserve Bank of Australia (RBA) will hold its monthly policy meeting on Tuesday and is considered certain to hold rates at a record low 1.5 percent following two cuts last year.(Reporting by Tokyo markets team; Editing by Eric Meijer)
Iran's central bank officially switches from using the U.S. dollar to the euro in its international transactions.