An increasing trend away from US dollar dominance continues. As the influence of the western economic system wanes, countries like Iran and Indonesia are leading the charge in conducting international trade using currencies other than the US dollar. Find out how these nations are forging new alliances and embracing alternatives to strengthen their economies and reduce dependency on the greenback.
Boosting Bilateral Trade with National Currencies
During an official visit by Iranian President Ebrahim Raisi to Indonesia on 23 May, the two countries signed an agreement emphasizing the significance of conducting exchanges in their national currencies. This move aims to enhance bilateral trade and foster closer economic ties between the nations.
Key Statistics
11 documents were signed, covering various areas of cooperation, including preferential trade, cultural exchanges, and oil and gas.
Iran and Indonesia aim to increase their trade volume up to $20 billion.
Non-oil trade between Iran and the BRICS+ group reached $38.43 billion in the fiscal year of 2022-23.
Common Views and Diplomatic Relations
President Raisi, during a joint press conference, highlighted the positive diplomatic relations between Iran and Indonesia, which span over 70 years. He emphasized the alignment of their views on regional and international issues, such as Afghanistan and Palestine, fostering a common ground for collaboration.
Condemning Aggressive Sanctions
President Raisi criticized the aggressive sanctions imposed by the West on Iran, stating that they have never succeeded in hindering the nation’s progress. He emphasized Iran’s determination to advance in science and technology while strengthening relationships with fellow Muslim countries and neighboring states.
De-Dollarization Efforts
Iran’s agreement with Indonesia is part of its broader efforts to de-dollarize its international trade. By reducing dependency on the US dollar, Iran aims to strengthen local currencies and enhance its economic resilience. Other countries in the region, including Iraq, Algeria, and the UAE, have also begun moving away from the dollar.
Expanding Alliances and Alternatives
Iran has engaged in discussions with countries like Russia and India to explore alternatives to the US dollar. Furthermore, Iran officially joined the Chinese-led Shanghai Cooperation Council (SCO), signaling its alignment with a group of nations seeking to decrease reliance on the western economic system.
ASEAN’s Transition Away from Established Currencies
Indonesia, as a member of the ASEAN alliance, is also transitioning away from established currencies, including the US dollar. During the 42nd ASEAN summit, member states, including Indonesia, signed an agreement to enhance regional payment connectivity and promote the use of local currencies. This strategic move is part of ASEAN’s broader efforts to reduce dependence on established currencies.
What it Means
The increasing trend of countries conducting international trade in currencies other than the US dollar is becoming more pronounced. As exemplified by the agreement between Iran and Indonesia, nations are actively seeking to enhance bilateral trade and reduce dependency on the greenback. This shift aligns with the broader global decrease in the influence of the western economic system, as countries explore alternatives and forge new alliances. Iran’s discussions with Russia and India, as well as its involvement in the SCO, highlight its commitment to de-dollarization. Similarly, ASEAN’s move towards using local currencies underscores the bloc’s strategic transition away from established currencies. These developments signal a changing landscape in international trade, with nations embracing alternatives to strengthen their economies and foster greater independence.