U.S. official says Iran currency to face more pressure

ROME, Oct 3 (Reuters) - Iran's tumbling rial currency willface more heavy pressure as the United States and its alliesenforce sanctions over Tehran's nuclear programme, a senior U.S.official said on Wednesday.

The rial has dropped 40 percent against the dollar in thelast week, hitting record lows and exposing President MahmoudAhmadinejad to accusations in parliament that he was notcompetent to manage the economy.

"The rial has been dropping quite steadily over the courseof the last year, and what we've seen over the last several daysobviously is a quite precipitous additional drop," David Cohen,U.S. Treasury Undersecretary for Terrorism and FinancialIntelligence, told reporters in Rome.

"Specifically what that was triggered by, I'm not in aposition to assess, but I think it is undeniable that the valueof the rial is under pressure and will remain under pressure aslong as the sanctions remain in place," he said.

"And just to be clear about this, the sanctions will remainin place and will intensify so long as Iran refuses to engagemeaningfully about its nuclear programme," he said.

Cohen's comments, on a five-day visit to Europe, came asriot police clashed with demonstrators protesting in Tehranagainst the fall in the currency.

He said the sanctions were putting "significant pressure" onthe Iranian economy but said the government was to blame for thedamage inflicted by sanctions, which have hobbled Iran's abilityto sell oil on world markets.

"Any impact that is felt in the Iranian population at largefrom the sanctions is entirely the result of choices made by theIranian government," he said.

(Reporting By James Mackenzie)

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Keywords: IRAN CURRENCY/US