The Islamic Republic of Iran has been forced to begin trading its oil for goods as the US-led imposition of sanctions make it increasingly difficult for the country to obtain hard currency for its oil exports. Bloomberg News reports that Iran has barter arrangements with China and India, and has tried to negotiate similar deals with Pakistan and Russia.
While the barter deals allow Iran to get something in exchange for its oil, piles of wheat and warehouses full of consumer products are not the same as cold, hard cash that can be used to buy stuff the country actually needs.
A second — a perhaps more devastating — impact on Iran falls on the country’s currency. By accepting goods instead of cash for its oil, Iran fans the flames of inflation as it must spend what hard currency it has to buy goods that it needs. At some point, the country’s economy could simply collapse. Bloomberg quotes an Iran researcher from the US Congressional Research Service:
Iran cannot stabilize the value of its currency with such unorthodox payment methods, and that is why its economy is collapsing. Iran is essentially on a junk-for-oil program.
One thing Iran does accomplish is to provide cover for its trading partners and make it harder for the US and others to track the country’s cash movements. But overall, that seems to be a price the US is willing to pay to stop the flow of hard currency to Iran’s nuclear research program.
Paul Ausick
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.