The website of broadcaster Press TV quoted a report in Jam-e Jam newspaper, in which unnamed “reliable sources” said the decision, to be implemented by late September, had been taken in response to the euro zone’s debt crisis.
The euro was little changed after the reports, easing slightly from $1.2227 to fluctuate around $1.2200 as some market players concluded Iran might struggle to buy such a large quantity of dollars.
“Central bank foreign currency experts … believe that this economic crisis in Europe is getting worse and will lead to a further fall in the value of the euro and will increase the value of the dollar,” the paper said in its Monday edition.
“This plan aims, gradually, during the next four months, to convert around 45 billion euros into dollars.”
The report said it “seemed that” the first of three phases, a sale of 15 billion euros, started “at the beginning of this (Iranian) month”, which began on May 22. The operation would be complete by the end of summer, it said. In Iran that is considered to be Sept. 22.
Officials at the Central Bank of the Islamic Republic of Iran declined comment. The bank usually does not announce such decisions.
Iran also does not usually disclose the value of its reserves, though state television reported last December they exceeded $80 billion. Jam-e Jam said the new policy move would reduce the proportion of euros in Iran’s total reserves to between 20 and 25 percent from a previous 55 percent.
“WORTHLESS”
Appearing to give precedence to economic factors over ideology, the switch would be a major policy reversal for Tehran, which for many years has shunned the dollar as part of its opposition to Washington.
At a 2007 OPEC summit, Iran — the world’s fifth-largest oil exporter — suggested oil should be priced in a basket of currencies rather than dollars, but it failed to win over other member states except Venezuela.
Iranian President Mahmoud Ahmadinejad told reporters at that time the dollar was a “worthless piece of paper”.
At recently as last November, central bank governor Mahmoud Bahmani said Iran’s then policy of moving away from the dollar, both in its reserves and in the currency it received for its oil exports had been beneficial.
Press TV reported at the time that since late 2007, 85 percent of Iran’s oil income had been in currencies other than the dollar and that it aimed to increase that to 100 percent.
Jam-e Jam said the central bank would now “encourage” a complete reversal of that policy.
“For those organisations which receive the most foreign currency, it is strongly recommended to minimise their trades in euros,” it said. “The most vivid example of this issue is the significant reduction in the acceptance of euros for the sale of Iran’s oil.”
Traders said the news was having limited impact on the euro, and some in the market were sceptical about whether Tehran would be able to buy significant amounts of dollars, given that U.S. depository institutions are banned from processing transfers involving the country.
A new draft of Iranian sanctions under discussion at the U.N. Security Council cites the central bank in a paragraph calling on U.N. member states to be vigilant in all transactions with Iranian banks to ensure they are not linked to Tehran’s nuclear or missile programs.
But the new sanctions would not blacklist the central bank completely — a proposal that was rejected by Russia, China and Germany, who feared it would make it impossible to do any business with Iran.
Bahmani made a first hint that Iran would move away from the euro last month.
“Considering that the value of the euro is plummeting and that of the dollar is increasing, we will be examining the issue of changing the composition of Iran’s hard currency basket,” he was quoted as saying in the May 18 edition of Hezbollah daily.
Wednesday’s report on the sale broke after official sources told Reuters that some of the world’s richest central banks would continue investing in Europe’s ailing single currency, supporting its reserve status despite the sovereign debt crisis plaguing the region.
The liquidity of both the euro and the dollar and the difficulty of switching large portfolios to other currencies mean there are no alternatives to them in the near term, the sources in Brazil, India, Japan and South Korea said in separate interviews.
(Writing by Robin Pomeroy; editing by John Stonestreet)
