Iran has proposed that the Shanghai Cooperation Organization (SCO) introduce a new single currency for its nine member states which together account for almost a third of global output.

The proposal was revealed last week by Mehdi Safari, Iran’s foreign minister in charge of economic diplomacy, according to the Islamic Republic News Agency. He said the use of a single currency by SCO member states “would help them solve the problems they face in trade.”

The development is a step up from the group’s earlier discussions on local currency exchange settlement as part of an objective to counter US dollar hegemony. It comes as sweeping sanctions imposed on Russia by Western nations for its invasion of Ukraine complicate trade deals for nations opposed to the sanctions.

“The proposal follows an effort started in September 2021 to gradually shift to mutual settlements in national currencies as part of the development of financial cooperation among SCO members and as a bulwark against US sanctions,” the agency said. Russian press. Sputnik said Friday.

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Iran hit hard by sanctions

Iran and Russia have both been hit hard by the sanctions imposed by Washington, while China President Xi Jinping said in late April that he opposed unilateral sanctions such as those imposed on Russia. The nine SCO members include China, Russia, India, Pakistan and four Central Asian countries. Iran joined the bloc last September.

The Iranian minister is expected to raise the issue at the upcoming SCO summit in September, hosted by Uzbekistan, Sputnik said. Iran first made the proposal in a letter it sent to the SCO nearly two months ago, Iran News Agency quoted Safari as saying.

China and Russia were among the SCO members most ‘vulnerable to’ sanctions given the ‘hostile political relations between them and the United States at present’, according to an article by the Chinese state-run newspaper. Global Times last September, citing Dong Dengxin, director of the Institute of Finance and Securities at Wuhan University.

“By extending local currency settlements, SCO countries would reduce the risk of being punished by the United States through financial means, such as freezing US dollar assets involved in SCO countries’ trade. OCS,” Dong said.

•Jim Pollard

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