Today's note:
Haft Koen's foreign trade; The sixth reader.
What is currency exchange and how can it help Iran's trade with China and Russia?
Dr. Daoud Danshjafri; member of the academic staff of Alma Tabatbai University.
A currency exchange is an agreement between central banks for a temporary exchange of two currencies with an obligation to repay in the future, which can cover the time gap between income from foreign currency and payment of import fees (for example with China and Russia).
The role of this instrument is to provide short-term liquidity; But if the country does not have reliable resources to repay, it will simply create currency debt.
The successful experience of countries such as China and the United Arab Emirates shows that the exchanges provide financial resources, but their implementation faces challenges such as the limited liquidity of the riyal, solvency risk, sanctions restrictions and the risk of dependency.
Therefore, exchange is not a substitute for real income from exports or a payment system, but a tool for temporary supply of foreign exchange and reducing time mismatch.
In the case of an agreement between Iran and China, this line must be used while accurately determining the ceiling, the repayment date and specific repayment sources.
Full text.
The official channel of Donya Akhtaz newspaper.