Last Updated: Sun Jan 01, 2012 17:57 pm (KSA) 14:57 pm (GMT)

Ahmadinejad says Iran’s central bank will face new U.S. sanctions with ‘strength’

Iranian President Mahmoud Ahmadinejad said that the Islamic Republic’s central bank will confront the new U.S. sanctions with strength and self-confidence. (File Photo)
Iranian President Mahmoud Ahmadinejad said that the Islamic Republic’s central bank will confront the new U.S. sanctions with strength and self-confidence. (File Photo)

Iran’s central bank will confront new U.S. sanctions with “strength,” President Mahmoud Ahmadinejad said on Sunday, a day after U.S. leader Barack Obama signed into law extra measures against the institution.

“The central bank is the backbone of dealing with the enemies’ pressure and it must with strength and self-confidence have the solidity to eliminate all of the enemies’ plots,” he told an annual assembly of the bank's senior officials, according to a statement on the presidency website.

“We should protect the people and the nation against the enemies' plots so people are not pressured,” he was quoted as saying.

Ahmadinejad added that “currently there is no particular problem in the economic sector,” discounting the effects of previous sanctions.

The new U.S. sanctions seek to further squeeze Iran’s crucial oil revenues, most of which are processed by the central bank.

Under the measures, foreign firms will have to choose between doing business with the Islamic republic or the economically mighty United States.

The sanctions, meant to punish Iran for its nuclear program, were contained in a mammoth $662 billion U.S. defense bill. Obama signed them into law despite reservations they would ties his hands on setting foreign policy.

Iranian leaders and military officials have warned that additional Western sanctions could push them to close the strategic Strait of Hormuz at the entrance to the Gulf.

Twenty percent of the world’s oil passes through the strait, making it the “most important choke point” globally, according to the U.S. Energy Information Administration.

Those warnings became more strident in recent days, with Vice President Mohammad Reza Rahimi vowing last Tuesday that “not a drop of oil will pass through the Strait of Hormuz” if more sanctions were imposed.

Oil prices spiked on that declaration, before subsiding somewhat on analysts’ views that Iran would devastate its own economy by taking such a drastic step. It would also lose the international diplomatic protection it enjoys from Russia and China, they said.

Iran, the second-biggest producer in OPEC after Saudi Arabia, depends on oil sales for 80 percent of its foreign currency earnings.

Iranian naval forces are also currently conducting 10-day war games near the strait.

Iran’s rial takes a dive

Iran’s currency, the rial, slipped to a record low Sunday. The state news agency IRNA and an Iranian website tracking the currency said the rial’s street value at money changers’ slid to around 16,000 to the dollar.

That represented a huge difference with the official central bank rate of 11,179 rials to the dollar.

Meanwhile, the head of Iran’s Chamber of Commerce, Mohammad Nahavandian, rejected the move as “unjustifiable”, saying such sanctions would have reciprocal consequences.

“The Iranian nation and those involved in trade and economic activities will find other alternatives,” Nahavandian was quoted by Reuters as saying.

Iranian officials insist that foreign sanctions have had no impact on the country's economy.

“The sanctions have raised the cost of trade and economic transactions but it has not managed to change Iran’s political behavior,” Nahavandian said.

The European Union is also mulling an embargo on Iranian oil purchases, and a decision could be announced at an EU foreign ministers' meeting at the end of the month.

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