Russian car manufacturers are switching to national currencies for payments to Turkey for supplies of components, with a number of companies announcing plans to do so, Russian Industry and Trade Minister Denis Manturov said yesterday. In an interview with the Sputnik news service, the Russian minister said Turkish producers "are switching now to transactions in national currencies with great pleasure."
"Switching to local currencies is always helpful in protecting yourselves from the risk. The lira has weakened, and the ruble is a bit weak. [Switching to local currencies] will be comfortable for us," he added.
On a question whether Russia had plans to pay with Turkish liras for supplies of car components traded with Turkey, Manturov said: "I cannot tell exactly whether our producers have switched today to purchases in local currencies because the number of our producers is too many. However, according to the interviews we had with a number of manufacturers a month ago, they were planning to switch [and trade in local currencies] in the near future."
The minister also told Sputnik that Russia was actively working to switch over to settlements in national currencies with countries in the Middle East, Southeast Asia, Latin America and Africa.
The issue of looking for an alternative medium for financial transactions that can decrease the domination of the dollar in international trade has been a hot topic recently, particularly after the re-imposed U.S. sanctions on Iran and Russia, leading to the rise of critical voices against the greenback and searches for concrete solutions to increase the share of other currencies in trade and financial markets.
Exposed to U.S. sanctions, Turkey and Russia have also recently expedited their efforts to increase the utilization of local currencies in trade transactions.
President Recep Tayyip Erdoğan said earlier that Turkey was preparing to increase trade with its top trade partners, including Russia, China, Iran and Ukraine, in local currencies instead of the U.S. dollar, adding that they were also ready to do the same with European countries.
The call has garnered support from Moscow, with the Kremlin saying Russia has been pushing for an arrangement with all countries to conduct trade in national currencies.
Finally, Erdoğan said Monday international trade's dependence on the dollar should be decreased as it has become an increasingly large problem.
During his speech at the 6th Summit of the Turkic Council at the Rukh Ordo Cultural Center in Kyrgyzstan, Erdoğan called on leaders of Turkic countries to carry out trade in national currencies. "We are proposing to trade in our own currencies rather than the U.S. dollar," he said.
In April, Turkey and Iran issued the first letter of credit in the form of a national currency swap to exchange the Iranian rial and Turkish lira. The swap will ease trade and transactions between the two countries and lower foreign currency risks after both currencies faced depreciation recently. Under this system, there is no need to rely on a third-party currency, like the U.S. dollar or euro, the news agency said, quoting the Central Bank of Iran (CBI).
Moreover, Turkey is also preparing to issue the first renminbi-denominated bonds this year.
The Sputnik report said commercial banks from Russia and Iran have recently agreed to pay for bilateral supplies of products in national currencies. It also noted that according to a declaration adopted at the St. Petersburg International Economic Forum (SPIEF), Russia and India are seeking to coordinate efforts on conducting trade in national currencies.
Iraqi authorities have also decided to stop using the dollar in trade settlements with Iran in favor of national currencies and the euro, Iraqi-Iranian Chamber of Commerce Chairman Yahya al-Ishaq said Sunday.