Turkish President Tayyip Erdogan and Iranian President Hassan Rouhani are seen during a joint news conference in Tehran, Iran, October 4, 2017. (Reuters Photo)

TEHRAN, Oct. 10 (Xinhua) -- Iran and Turkey signed an agreement on Tuesday to carry out trade activities in their own local currencies, Press TV reported.

The agreement was signed during a visit to Ankara by Valiollah Seif, the governor of the Central Bank of Iran (CBI), with his Turkish counterpart.

They agreed to use Iranian rial and Turkish Llira in their trade transactions instead of traditional foreign currencies such as the euro and the dollar, the report said.

"The agreement is meant to help prepare the ground for the expansion of mutual economic relations between Iran and Turkey and also facilitate trade in currencies of the two countries," Seif was quoted as saying.

"Based on it, Iran's rial and Turkey's lira can be easily converted into each other and merchants on both sides of the border can accordingly use those currencies for their trade activities," he said.

This could help reduce the costs relating to the conversion as well as the transfer of currencies, he added.

The banks of the two countries can use the international payment tools to convert currencies into rials and liras, he pointed out.

The Iranian official emphasized that the agreement would come into effect during the next meeting of the joint economic commissions between the two countries.

The preliminary agreement was signed during the recent visit of the Turkish president to Tehran last Wednesday.

"The potential to boost Iran-Turkey trade relations to 30 billion U.S. dollars exists but the barriers to this need to be removed one by one," Seif told official IRNA newsagency.

"One important barrier was the limitations in banking channels of the two countries. The agreement to trade in local currencies can help remove it," he said.