Iran Economy NewsIran’s Central Bank to reduce euro, dollar reserves

Iran’s Central Bank to reduce euro, dollar reserves

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Bloomberg: Iran will reduce the proportion of euros and dollars in its reserves, while maintaining its overseas holdings of the Western currencies in the face of sanctions over the country’s nuclear program, according to a Central Bank official in Tehran.

By Ali Sheikholeslami

Aug. 12 (Bloomberg) — Iran will reduce the proportion of euros and dollars in its reserves, while maintaining its overseas holdings of the Western currencies in the face of sanctions over the country’s nuclear program, according to a Central Bank official in Tehran.

Dollars already have a smaller role in Iran’s trade and the use of euros also will be reduced, though neither will be eliminated from Iran’s accounts, Reza Nadali, head of the bank’s international department, said today in a phone interview. “We won’t shun them,” and for oil transactions, “the bank accepts any currency agreement reached between the buyer and the seller,” he said.

Nadali commented in response to reports this week that Iran will end the use of euros and dollars. Vice President Mohammad Reza Rahimi was cited in Iranian media, including Khabar, as saying Iran will cease transactions in the “filthy” currencies in retaliation for restrictions imposed by the United Nations, the U.S. and the European Union. Rahimi said Iran will replace its euros and dollars with Iran’s rial and the currencies of allies, according to the reports.

Iran is under four sets of UN sanctions over its nuclear program, which the U.S. and many of its allies say may be aimed at producing weapons. Iran, the second-largest producer of oil in the Middle East, denies the allegation, saying it needs nuclear energy for civilian purposes, such as electricity generation.

The U.S. and the EU followed the UN’s June 9 sanctions with tighter measures of their own against Iran. The UN restrictions bar financial transactions if they may have a nuclear purpose. On July 1, the U.S. blocked access to the American financial system for banks that do business with Iran. On July 26, the EU restricted export-credit guarantees and insurance and ordered closer monitoring for such banks.

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