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Dollar Drops as Iran shifts to Euros

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    Dollar dropped in Iran asset move Iran shifts its foreign currency reserves from dollars to euros BBC NEWS 2006/12/18
    Message 1 of 1 , Feb 1, 2007
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      Dollar dropped in Iran asset move


      Iran shifts its foreign currency reserves from dollars to euros
      BBC NEWS
      2006/12/18
      http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/6190865.stm


      Iran is to shift its foreign currency reserves from dollars to euros
      and use the euro for oil deals in response to US-led pressure on its
      economy.

      In a widely expected move, Tehran said it would use the euro for all
      future commercial transactions overseas.

      The US, which accuses Tehran of supporting terrorism and trying to
      obtain nuclear weapons, has sought to limit the flow of dollars into Iran.

      It wants the United Nations Security Council to impose sanctions on Iran.

      Dollar squeeze

      Analysts said Tehran had been steadily shifting its foreign-held
      assets out of dollars since 2003 and that Monday's announcement was
      unlikely to affect the value of the dollar, which has weakened
      significantly in recent months.

      There will be no reliance on dollars
      Gholam-Hussein Elham, Iranian spokesman

      An Iranian spokesman said all its foreign exchange transactions would
      be conducted in euros and its national budget would also be calculated
      in euros as well as its own currency.

      "There will be no reliance on dollars," said Gholam-Hussein Elham.

      "This change is already being made in the currency reserves abroad."

      The currency move will apply to oil sales although it is expected that
      Iran, the world's fourth largest oil producer, will still accept oil
      payments in dollars.

      Nuclear trigger

      Washington has sought to exert financial pressure on Iran, which it
      accuses of flouting international law by trying to acquire nuclear
      weapons.

      Tehran denies this, saying its nuclear research is for purely geared
      towards civilian uses.

      Most international banks have stopped dollar transactions with Iran
      and some firms have ceased trading with Iran altogether in
      anticipation of possible future sanctions.

      The dollar slipped slightly against the euro in New York trading
      although analysts said they did not expect the reaction to be too severe.

      "It is something they have been saying they are going to do for quite
      a long time now, so I wouldn't expect any market reaction," said Ian
      Stannard, an economist with BNP Paribas.

      The BBC's Tehran correspondent Frances Harrison said Iranian
      businessmen were complaining about delays in securing letters of
      credit and saw current conditions as a prelude to the imposition of
      sanctions.

      Tehran has urged Iranian businesses to open letters of credit in euros
      in the future.

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