Ahmadinejad orders forex reserves shift to euro

September 21, 2009

Beirut: Iranian President Mahmoud Ahmadinejad has ordered Iran’s foreign currency reserves, currently in US dollars, to be held in euros, Press TV reported.

The order was issued on September 12 following a decision by the trustees of the country’s foreign reserves, the state-run news channel said on its website.

The Central Bank’s Vice Governor for Foreign Exchange Affairs, Hamid Borhani, could not immediately be reached to comment on the report in Tehran.

The US dollar has declined against the euro in recent months amid the global financial crisis and the drop in assets from homes to equities.

Political tension between Iran, which has the second-largest oil reserves after Saudi Arabia, and western countries has increased due to suspicions Tehran is trying to develop nuclear weapons and after it quashed street protests following June’s presidential election.

Iran’s economy is suffering from the decline in oil prices to about $71.58 a barrel from a peak of $147 in July of last year. The world’s fourth-largest oil producer needs oil prices of $85 to $90 to stop running budget deficits, the International Monetary Fund says.

Iran’s inflation dropped to 14 per cent in the Iranian month of Tir ending July 22, the Central Bank said last month. Inflation slowed from 14.5 per cent in the previous months.

In the last two years Syria and Kuwait de-pegged their currencies from dollar to curb rising import costs and inflation.

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