KARACHI - Pakistan's bilateral trade with Iran is likely to edge up to around one billion dollars next year as the State Bank of Pakistan has added the Euro as second currency in Asian Clearing Union mechanism, exporters told The Nation. Earlier Pakistani banks were not allowed to Letter of Credits (LCs) in currencies other than the US dollar while the Iranian banks were not accepting the LCs in US dollars that badly undermined the bilateral trade between two countries, exporters said. Last week the SBP has included Euro in the Asian Clearing Union as the second ACU currency, after the US dollar which would be enforced from 1st January 2009. The ACU Euro would be equivalent in value to one Euro. Accordingly, transaction under ACU Mechanism, in addition to ACU Dollar (ACUD), might also be denominated and settled in ACU Euro (ACUE) would effective from 1st January 2009. SBP further said that the authorized dealers might establish ACUE accounts with their correspondents in ACU member countries and open their correspondents' ACUE accounts with them while the banks to SBP would report transactions in ACUE. Exporters welcomed the move of central bank of Pakistan and hoped that permission to open LCs in Euro will have positive impact on trade with Asian countries especially with Iran. They said that the traders of Pakistan and Iran were facing a great hardship in carrying out bilateral trade as Iran has banned the opening of LCs in the US dollars while Pakistan has made it mandatory that all the LCs would be opened in the US currency. Zubair Tufail Chairman Pak-Iran Business Council and vice president of FPCCI while talking to The Nation said SBP's decision to add Euro as second ACU currency along with US dollar will edge up the dwindling bilateral trade between Pakistan and Iran. The Iranian banks were not accepting the LCs in US dollar due to tension between Iran and USA on nuclear issue which caused huge losses in financial terms to both the countries. Currently, annual bilateral trade between Pakistan and Iran has squeezed to $300 million dollars, Zubair said, hoping that this bilateral trade is likely to increase to one billion dollars in next financial year. Meanwhile, during the past one and a half year Iranians, who used to import from Pakistan, started importing different items from India and other regional countries on account of inflexible attitude of Pakistan's central bank regarding the issuance of letter of credit in local currency of Iran, exporters. An exporter who deals in trade with Iran told The Nation that country's important exportable commodities to Iran are rice, cotton, yarn, garments, fresh fruits, etc. While exporter and president of Union of Small and Medium Enterprises Zulfiqar Thaver said that with the addition of Euro as second ACU currency, now it will be an option for the exporters and importers either to open LCs in Euro or in dollar. The exporters and importers can assess the parity of Euro and dollar and select the currency, which is favourable to them, he added.