FX.co ★ Turkey to scrap USD in trade with India

Turkey’s government aims to negotiate the idea of scrapping the US dollar in mutual trade settlements with India. Importantly, India is one of Turkey’s key trade partners that means massive sales volumes between the two huge economies.

President Recep Tayyip Erdogan is certain the time is ripe to reboot the economic cooperation between Turkey and India. “Export and import transactions may be conducted in national currencies, which will reduce the negative impact of currency fluctuations,” President Erdogan stated at a business forum in New Delhi during his visit to India. Interestingly, to ditch the US dollar is the first step in the large-scale overhaul. Ankara and New Delhi are rapidly expanding the scope of mutual interests. So, a new sphere of cooperation could be nuclear energy. Turkey’s president unveiled this and other promising projects at the forum. However, experts take these pledges with a pinch of salt. In fact, his rhetoric does not frequently match his deeds. Earlier, the proposal to abandon the greenback in trade transactions was put forward by Ankara and Moscow. Last year, Turkey’s Prime Minister Binali Yildirim said that central banks of Russia and Turkey have already been assigned to devising technical solutions for how to switch to national currencies in trade. However, both parties declared their intentions and halted negotiating.

Perhaps, a draft agreement on broad economic partnership between Turkey and India will have a happy end. However, one weighty issue makes the whole affair rather complicated. In 2017, Turkey’s national currency has been the worst performer among currencies of other emerging economies. In January 2017, the Turkish lira hit an all-time low of 3.7790 against the US dollar.