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Iran sanctions may trigger currency shift: DAE chief

DAE Capital’s chief executive speculates that the United States’ withdrawal from the Iran nuclear deal could challenge the dollar’s status as a global reserve currency, with flow-on effects for aviation.

Speaking at the recent ISTAT Asia event, Firoz Tarapore says that the lessor had tried to position itself for the “unique opportunity” to serve the Iranian market when sactions eased, and expected to see demand for 400-500 aircraft from the country.

Growing rhetoric from US president Donald Trump against the Obama-era Iran nuclear agreement had already caused DAE to change its posture in recent months.

Tarapore says that it would be “problematic now to think about doing business in Iran.”

That is primarily due to the need for any payments from Iranian carriers to be conducted in US dollars, which would break the sanctions and expose companies and banks to massive fines.

But, with the prevalence of cryptocurrencies and challenges from other currencies to the US dollar’s reserve status, Tarapore speculated that they could be used to allow transactions to be conducted “without touching the US dollar payment system.”

“I think this could be one of those unintended, very, very bad consequences for the dollar, which unfortunately has bad consequences for us as well as a dollar-based business,” he adds.

“The world used to be a totally different place when the dollar took its position as the reserve currency. It is so far from that today but the solutions don’t seem to have changed.”

News of the withdrawal from the nuclear accords came before the last day of ISTAT Asia, after Boeing and Airbus representatives had already presented at the event.

Speaking briefly on Iran, ATR’s general manager sales for ASEAN and the Pacific, Christophe Potocki hinted that the manufacturer may look to bring forward some of Iran Air’s orders for turboprops to get more aircraft delivered before sanctions are re-imposed.

“It’s definitely a challenge in the long-term but if you want to be smart, you try to accelerate your delivery span,” he said.

Flight Fleets Analyzer shows that Iran Air has received eight ATR 72-600s out of a firm order for 20 aircraft, plus 20 options.

Other sources that FlightGlobal spoke with speculated that the sanctions could be a blow to smaller aircraft traders, with Iranian purchasers said to be paying above market rates for some mid- and end-of-life aircraft.

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