Iran, Pakistan agree to widen financial, monetary relations

Tehran, September 15, 2011 (PPI): Senior Iranian and Pakistani officials endorsed an agreement to consolidate and further bolster financial ties between the two Muslim neighbouring states, Iran's FARS news agency reported on Thursday. It was signed during recent visit to Iran by Pakistan Prime Minister Yusuf Raza Gilani and touches on consolidated ties and cooperation between the two countries' central banks. According to agreement endorsed by both countries' central bank governors, Tehran and Islamabad will develop trade transactions through Asian Clearing Union (ACU) mechanism.

In relevant development, Iran and Pakistani officials last week discussed Tehran's request for opening branches of state-owned Bank Melli in Pakistan. The bank has been placed on the US sanctions lists, but Islamabad says it move forward with Iran's proposal, FARS report stated.

Iran-Pakistan Join Economic Commission in its last week meeting at Islamabad decided to allow Iran to set up a branch of its largest commercial bank in Pakistan despite UN restrictions on Iran's banking sector. State Bank of Pakistan is expected to begin guaranteeing letters of credit - a necessary tool for global traders to exchange payments - for trade with Iran, which is expected to help increase volume of trade between two nations, FARS report further said. An Iranian diplomat said Tehran is targeting increasing annual bilateral trade with Pakistan to $10 billion.