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

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

The rial has dropped 40 percent against the dollar in the last week, hitting record lows and exposing President Mahmoud Ahmadinejad to accusations in parliament that he was not competent to manage the economy.

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

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

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

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

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

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

(Reporting By James Mackenzie)

((james.mackenzie@thomsonreuters.com)(+39 0685224351)(Reuters Messaging: Reuters Messaging james.mackenzie.reuters.com@reuters.net))