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Tuesday, Oct 2, 2012 3:30 PM UTC

Iran president: ‘Psychological’ blows hit currency

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Iran president: 'Psychological' blows hit currencyIranian President Mahmoud Ahmadinejad adjusts his jacket as he listens to the Iranian national anthem at the start of a press conference in Tehran, Iran, Tuesday. Ahmadinejad blamed the steep drop in Iran's currency Tuesday to "psychological pressures" linked to Western sanctions over Tehran's nuclear program. (AP Photo/Vahid Salemi) (Credit: AP)

TEHRAN, Iran (AP) — Iran’s president on Tuesday blamed the steep drop in Iran’s currency on “psychological pressures” linked to Western sanctions over Tehran’s nuclear program and Iran’s increasing bitter political battles.

The remarks were part of Mahmoud Ahmadinejad’s attempt to deflect criticism from political rivals that his government’s policies also have contributed to the nosedive of the Iranian rial, which has lost more than half its value against the U.S. dollar this year and has sharply pushed up costs for many imported goods.

The price hikes have added to the burdens on Iran’s economy as it struggles with tougher sanctions targeting its crucial oil exports and measures blocking it from key international banking networks. The U.S. and its allies have imposed the punishing measures in attempts to force Iranian concessions over its nuclear program, which the West says is aimed at developing atomic weapons. Tehran insists the program is for peaceful purposes.

An Iranian parliament member, Mohammad Bayatian, was quoted on the chamber’s website, icana.ir, as saying that enough signatures have been collected to force Ahmadinejad to face questioning before lawmakers over the currency’s tumble.

Ahmadinejad directly criticized parliament speaker Ali Larijani for his claims, reported by the semiofficial Fars news agency, that “80 percent” of economic problems were linked to government mismanagement and the rest to sanctions.

The rial’s sharp decline is attributed to a combination of Western sanctions and government policies, such as fueling inflation by increasing the money supply while also holding down bank interest rates, which prompted many people to withdraw their rials to exchange for foreign currency.

“The speaker should help the government overcome the problem instead of accusing the administration,” Ahmadinejad told reporters his first news conference since returning from the U.N. General Assembly. Larijani is among the possible candidates for next June’s presidential elections that will pick Ahmadinejad’s successor.

Iran’s currency fell again Tuesday, hitting a record low of 35,500 rials against the U.S. dollar on the unofficial street trading rate, which is widely followed in Iran. It was 29,500 rials to the dollar Sunday. Two years ago, it was close to 10,000 rials for $1.

“Are these (currency) fluctuations because of economic problems? The answer is no,” Ahmadinejad said. “Is this because of government policies? Never … It’s due to psychological pressures. It’s a psychological battle … The enemy is making pressure by playing with (exchange rate) numbers in the street.”

Ahmadinejad described the sanctions as part of a “heavy battle” that has succeeded in driving down oil exports “a bit,” but he gave no precise figures. Some oil analysts estimate exports have fallen by more than 30 percent since July, when the 27-nation European Union halted purchases of Iranian crude.

The Iranian president claimed Iran has enough hard currency to meet the country’s needs. Iranian officials also have insisted that Iran can ride out sanctions by expanding oil contracts with Asian markets such as China and India.

But the currency nosedive could bring even more political heat on Ahmadinejad, who has been left severely weakened after unsuccessfully challenging Supreme Leader Ayatollah Ali Khamenei over the powers of the presidency. Ahmadinejad now could face increasing domestic attacks before elections.

Earlier this year, Ahmadinejad became the first president hauled before the 290-seat parliament for questioning over his public feud with Khamenei.

More Nasser Karimi.

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