Arash Aramesh

Mohammad-Reza Rahimi, Iran’s first vice president, said July 23 that his country was considering replacing the Euro and the US dollar with the Chinese Yuan for future oil transactions. Rahimi did not specify when such a transition would take place, nor did he say whether the Iranian parliament has approved the measure.

According to Fars news, a pro-government news agency with intimate ties to the Islamic Revolutionary Guards Corps, Rahimi told reporters: “Iran has the right to use any currency and we will do what serves our country’s interests. We have different agreements with different countries. What is important to us is getting rid of the Euro and the dollar.”

Recently, there were rumors that Iran was going to use the Dirham, the currency of the United Arab Emirates, instead of the Euro. After weeks of deliberations, Iranian officials decided not to use the Dirham given, according to their calculations, the limited size of the UAE’s economy and its lack of financial stability relative to the European Union and the United States.

Three years earlier, Iran converted its dollars to Euros when President Mahmoud Ahmadinejad predicted the death of the US economy. At the time, the American dollar was at one of its weakest points. Since then, the US dollar has gradually gained strength while the Euro has come under tremendous pressure by the global financial crisis. President Ahmadinejad has been criticized by a number of conservatives in the Iranian parliament for converting most of Iran’s reserves in dollars to Euros so quickly.

Following the global financial crisis, there are doubts whether the Euro is as stable a currency as it was once believed. The Iranian government’s decision to move away from the Euro is probably a bid to safeguard itself against another financial plunge which could be devastating to its holdings.

Iran’s move to abandon the Euro and the US dollar is not entirely motivated by economic calculations. According to BBC Persian service, Iran is seeking revenge for recent UN, US, and now EU sanctions. By converting billions of dollars worth of Euros and dollars to Yuan, the Islamic Republic aims to cause some damage to the two largest economies in the world, especially at a time when the US and the EU are struggling to recover from the greatest recession in recent history.