Since the U.S. has had near absolute control over the global financial system for the past 70 years through its position as the keeper of the global reserve currency, the dollar can and has been used as a weapon to force other nations to succumb to their national and foreign policy agendas. However for beleaguered Iran, which has been the focal point of economic and political sanctions from the U.S. over the past decade, the decision to fight back has now suddenly occurred on Jan. 24 as the Middle Eastern oil power announced they were ending their relationship with the petro-dollar and the American currency, and were beginning new bi-lateral trade in currencies other than the dollar.
Iran's shift in policy leaves open the option of a plethora of different strong currencies they can now use and accept in trade, including the Yuan, Rouble, Euro, and even the Turkish Lira. And as the price of oil drops at the same time the U.S. dollar is rising to much higher levels, accepting other currencies like the newly devalued Euro will facilitate greater trading options for Iran through a combination of arbitrage, and lower prices elsewhere for imported goods.
Iran is stopping mutual settlements in dollars with foreign countries and agreements on bilateral swap in new currencies will be signed in the near future, the Central Bank of Iran (CBI) has said.
“In trade exchanges with foreign countries, Iran uses other currencies, including Chinese yuan, euro, Turkish lira, Russian ruble and South Korean won,” Gholamali Kamyab, CBI deputy head, told the Tasnim state news agency.
He added that Iran is considering the possibility of signing bilateral monetary agreements with several countries on the use of other currencies.
Kamyab believes bilateral currency swap agreements will ease trade and economic transactions between Iran and other states. - Russia Today
On top of this new announcement, Iran also completed a new agreement with China for a $2 billion line of credit to aid in the construction of new petro-chemical projects that might include the building of refineries and other self-sustaining infrastructures.
Iran is not the only nation to see use of the dollar as more of a detriment to their economy than a bastion of stability. Earlier this month Russia announced their were divesting themselves of over $80 billion in dollar reserves in preparation of their new SWIFT system that will facilitate their buying and selling of oil in currencies other than the dollar.
Since 1998, use the dollar worldwide has been in decline, with a massive acceleration occurring in 2014 and continuing in strength into 2015. And with the recent death of the Saudi King sending shockwaves across the energy world on whether the new successor to the throne will remain an ally to the petro-dollar, more and more oil producers are taking matters into their own hands and pushing the 40 year petro-dollar system to the breaking point.