Using local currencies with trade partners has been on Turkey’s agenda for a time, and some concrete steps have been taken to that end. During President Recep Tayyip Erdoğan’s visit to Iran Wednesday, Turkey and Iran agreed to use local currencies as the medium of exchange in bilateral trade to alleviate foreign currency pressure. The president announced that the central banks of the two countries would meet next week to sign an agreement to start the procedure to use local currencies in trade.
The focal point of Erdoğan’s visit to Iran Wednesday was regional issues that have escalated with the Iraqi Kurdish Regional Government (KRG)’s referendum to secede from the central Iraqi government. Yet, the visit marked mutual strong determination to boost bilateral trade, which currently stands around $10 billion, to $30 billion and to trade in local currencies of both countries in imports and exports. Energy, tourism and defense authorities in both countries have agreed to institute stronger collaboration.
Turkey’s efforts to boost trade in Turkish lira have recently bore fruit. According to data obtained from the Turkish Statistical Institute (TurkStat), exports in Turkish lira soared 128 percent in August compared to the same month last year, reaching about $1.32 billion while imports in the currency rose 39 percent in the same month. Considering that exports made in Turkish lira stood at around $578.75 million in August last year, the usage of the currency in exports increased by 128 percent in one year.
In addition to the use of local currencies in bilateral trade, Turkey and Iran will also expand cooperation in finance. “Financial cooperation will gain momentum with the opening of branches of Turkish banks in Iran and a more expansive network of the branches of Iranian banks in Turkey,” Erdoğan said.
Energy was another topic of Erdoğan’s meeting with Iranian President Hassan Rouhani. Both leaders have confirmed that the Turkish and Iranian energy ministers will enable more cooperation regarding the sector. While Iran’s crude oil exports to Turkey are on the rise, the country also ranks second in natural gas exports to Turkey. Last year, Turkey imported 7.7 billion cubic meters (bcm) of natural gas, which corresponds to 16.62 percent of the country’s total gas imports. The energy trade will further be supporter after the conclusion of the necessary negotiations between the energy ministries.
Moreover, increasing the volume of bilateral tourism activities also occupied the meeting agenda. While Rouhani invited Turkish investors to make more investments in the country’s tourism, Erdoğan also called on players in Turkish tourism to increase investments in the country, citing the rich cultural history of Iran and expressing Turkey’s willingness to share its tourism experience with its neighbor. Rouhani also said that the Iranian government would facilitate investment procedures for Turkish businesses in tourism, infrastructure and logistics. The two leaders said that Turkey and Iran are also ready to develop joint tourism agencies to boost bilateral tourism activities.
Meanwhile, Turkey has recently seen an increase in the number of tourists. For instance, reports state that the number of Iranian tourists to Istanbul has seen an upward trend in recent years and could soon surpass the number of German visitors, partially as a result of the economic recovery experienced after a nuclear deal lifting sanctions on Iran. Data from the Istanbul Provincial Directorate of Culture and Tourism showed that 386,339 Iranians visited Istanbul in 2013, while the number grew in the following years to 590,920 in 2014, 755,707 in 2015 and 337,259 in the first six months of 2017.