Europe News

Iran’s Central Bank Chief Not Resigning: Report


The Governor of the Central Bank of Iran (CBI) has not stepped down despite rumors to the contrary, according to comments carried by the semi-official Fars news agency.

Iranian Flag
Stockbyte | Getty Images

Mahmoud Bahmani, who took the top post in September of 2008, has come under increasing pressure after Iran’s currency took another hit following the latest round of US sanctions.

Since September, the Iranian Riyal has lost over 30 percent of its value as people tried to move to foreign currencies.

Iranian officials have denied that the latest slide in the value of the currency had anything to do with sanctions or foreign pressures.In an interview with state-run Press TV on Saturday, Foreign Minister Ali Akbar Saleh deflected any concerns about falling reserves.

“This year Iran exported crude oil over 90 billion dollars, non-oil exports are expected to top 45 billion dollars by March… sanctions will have no impact on Iran's economy which also happens to have enough gold reserves for 15 years,” Rahimi told Press TV.

The CBI has been an active purchaser of gold over the last few years as it sought to diversify away from US dollars.

Last year, a US diplomatic cable obtained by WikiLeaks and seen by the Financial Times, described moves by Iran to purchase gold as “significant”.

According to OPEC, Iran produced some 3.55 million barrels per day in November.

Higher oil prices have kept economic growth resilient, estimated by the IMF at 2.5 percent in 2011 and forecast to strengthen to 3.4 percent in 2012.

The Iranian government depends on oil exports for over 50 percent of its revenue.

Although inflation has remained high at 22.5 percent, the IMF foresees an easing to 12.5 percent in 2012.

Its assessment was published in September, and many of the economic variables have since changed due to the deteriorating geopolitical situation.

Last week the CBI admitted that it is considering using a variety of instruments, including an increase in interest rates on bank deposits, to stem the fall in the local currency.

The central bank’s website listed the official USD exchange rate at 11.230 Iranian Riyals on Sunday, but the number has little relevance on the open market where it was hovering close to 16 riyals.

Interest rates were last adjusted in April of 2011 as part of a loosening of monetary policy to stimulate economic activity.

Meanwhile, the head of Iran's Atomic Energy Organization (IAEO) said the country's first nuclear power plant in Bushehr will start operating at full capacity within a few weeks.

This comes as the European Union is expected to decide on new sanctions and possibly, an oil embargo.

The US government signed additional sanctions into law on December 31, penalizing foreign banks that do business with the CBI, which serves as the main clearinghouse for the country’s oil and gas sales.