China and Iran discuss currency swap

China and Iran are moving towards the introduction of a currency swap mechanism as a means of boosting bilateral trade, the deputy head of the Iran-China Joint Chamber of Commerce Majid-Reza Hariri said over the weekend. The mechanism would facilitate payments in yuan to suppliers of commodities and services to Iran in return for the oil that Beijing purchases from Tehran and help Iran work round sanctions, he explained. Although talks were still in the early stage and technicalities still had to be worked out, payments in yuan would help strengthen the Chinese currency against the dollar, he added.
China owes Iran an estimated $20bn in outstanding oil payments that is currently frozen in overseas banks after the US-led sanctions made it difficult for Beijing to transfer money to Tehran. As a result, the two countries have reportedly reached a deal to settle a part of the frozen money through China’s funding of Iranian petrochemical projects with China last week reported to have begin proceedings to provide up to $16bn funds towards the development of Iran’s petrochemical sector.

Source: isna