07 September 2011
Governor of the Central Bank of Iran (CBI) is due to ask the Monetary and Credit Council, the highest decision-making body on financial affairs, to increase the interest rates on savings.
Mahmoud Bahmani further stated that the current rate was set last year when the inflation rate stood at 12% while this figure has currently risen to 17%, Fars News Agency reported.
"In June, we proposed a review of the interest rate but it was rejected since members of the council believed the inflation rate would remain low, but this did not happen," Bahmani said.
Economists believe the low interest rate of about 11% on short-term savings has caused uncontrolled and high fluctuations in the price of gold, particularly gold coin, diverting huge amount of liquidity to the gold market.
Gold Reserves Value Triples
To prevent a freeze of its overseas reserves, Iran withdrew its deposits from foreign banks and allocated $13 billion of the reserves to buying gold--the value of which has now tripled.
Bahmani said the CBI bought gold at $656 per ounce whereas now the price per ounce of gold has jumped to $1,870 showing a three-fold rise in the value of gold that Iran bought.
The chief banker added that the value of Iran's foreign exchange reserves has increased to $6.5 billion as the CBI converted some of its reserves from dollar to other currencies.
Political Bluff
Bahmani described attempts by the US Senate to impose sanctions on Iran's central bank a 'political bluff'.
His comments came after some US senators signed a letter to President Barack Obama pressing him to sanction Iran's Central Bank.
The US legislators claim that the measure can potentially immobilize Iran out of the global financial system, and make it nearly impossible for Tehran to clear billions of dollars in oil sales every month.
Bahmani recalled that US officials had earlier accused CBI of money laundering and financial terrorism during the 2010 annual meeting of the IMF and the World Bank in Washington.
"We responded to the accusations in the meeting and proved that the US views on the issue was purely political and the participants of the meeting accepted the Iranian delegation's views and the issue was laid to rest there," Bahmani explained.
Bahmani announced that he will participate in the next IMF meeting to 'defend Iran's banking legitimacy and dismissing the US accusations'.
Iran is not afraid of new sanctions and any move to isolate the country economically will only spur self-sufficiency, he noted.
Governor of the Central Bank of Iran (CBI) is due to ask the Monetary and Credit Council, the highest decision-making body on financial affairs, to increase the interest rates on savings.
Mahmoud Bahmani further stated that the current rate was set last year when the inflation rate stood at 12% while this figure has currently risen to 17%, Fars News Agency reported.
"In June, we proposed a review of the interest rate but it was rejected since members of the council believed the inflation rate would remain low, but this did not happen," Bahmani said.
Economists believe the low interest rate of about 11% on short-term savings has caused uncontrolled and high fluctuations in the price of gold, particularly gold coin, diverting huge amount of liquidity to the gold market.
Gold Reserves Value Triples
To prevent a freeze of its overseas reserves, Iran withdrew its deposits from foreign banks and allocated $13 billion of the reserves to buying gold--the value of which has now tripled.
Bahmani said the CBI bought gold at $656 per ounce whereas now the price per ounce of gold has jumped to $1,870 showing a three-fold rise in the value of gold that Iran bought.
The chief banker added that the value of Iran's foreign exchange reserves has increased to $6.5 billion as the CBI converted some of its reserves from dollar to other currencies.
Political Bluff
Bahmani described attempts by the US Senate to impose sanctions on Iran's central bank a 'political bluff'.
His comments came after some US senators signed a letter to President Barack Obama pressing him to sanction Iran's Central Bank.
The US legislators claim that the measure can potentially immobilize Iran out of the global financial system, and make it nearly impossible for Tehran to clear billions of dollars in oil sales every month.
Bahmani recalled that US officials had earlier accused CBI of money laundering and financial terrorism during the 2010 annual meeting of the IMF and the World Bank in Washington.
"We responded to the accusations in the meeting and proved that the US views on the issue was purely political and the participants of the meeting accepted the Iranian delegation's views and the issue was laid to rest there," Bahmani explained.
Bahmani announced that he will participate in the next IMF meeting to 'defend Iran's banking legitimacy and dismissing the US accusations'.
Iran is not afraid of new sanctions and any move to isolate the country economically will only spur self-sufficiency, he noted.
© Iran Daily 2011
