Iran and Qatar consider establishing joint currency exchange entity

The head of Iran-Qatar Joint Chamber of Commerce has proposed the establishment of a financial institution aimed at facilitating transfer of funds to and from Qatar.

Mostafa Salehinejad discussed the plan a day after President Masoud Pezeshkian returned from Qatar. Upon his arrival, the President announced that Tehran had reached an "understanding" with Doha regarding the $6 billion Iranian fund, which had been released last year from South Korean banks and is currently held in Qatar.

In August 2023, the US and Iran reached an agreement that led to the exchange of five detained Americans in Tehran for five Iranians imprisoned in the US. A crucial part of the deal was the transfer of $6 billion in frozen Iranian assets from South Korean banks to Qatar, allowing Iran conditional access to the funds for the purchase of non-sanctioned goods.

However, following the Hamas attack in October, the US and Qatar agreed to impose restrictions on Iran's access to these funds, halting the full disbursement but not completely freezing the assets.

Iran's Ministry of Foreign Affairs said in December that the money is accessible to Iran despite calls from Washington to withhold it. The Central Bank of Iran said earlier this year that the fund is deposited in Iran’s accounts in two Qatari banks. Pezeshkian’s remarks in Doha hinted that restrictions continue to prevent Tehran from accessing the funds.

Iran's international banking transactions are also under US sanctions, which hampers fund transfers to and from the country.

Salehinejad expressed hope that the president's visit would result in the establishment of an exchange bureau, which would significantly streamline financial transactions.

A joint exchange house could potentially help in bypassing international sanctions, allowing Iran greater access to foreign currency and enabling smoother trade operations.

“Iranian traders currently have to transfer their foreign earnings to the UAE first and then to Iran, which reduces their profits by 20%,” he said.“The main solution is the establishment of a joint bank, which does not seem feasible due to sanctions" imposed on Iran’s banking sector.

Underlining that Qatar is committed to international laws that focus on sanctions against Iran, Salehinejad said that “under these circumstances, if the outcome of the Iranian President's visit to Qatar is the establishment of this very currency exchange entity, it will be a significant achievement.”

He noted that the plan was under study during the previous Iranian administration and voiced optimism that it will be implemented under the current one.