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Payvand Iran News ...
06/09/10 Bookmark and Share
Dollar, a "Worthless Piece of Paper" Appreciated Again by Iran: 22 Percent Loss for Dumping the Dollar

By Nima Rasaie, Rooz Online

 

The American Dollar, which Ahmadinejad last year referred to as a "worthless piece of paper", has once again become the currency of choice for Iran's foreign currency reserves. The elimination of the Dollar as Iran's foreign exchange currency lasted only two years. When the Ahmadinejad's administration announced two years ago the conversion of its international currency from the Dollar to the European Euro, much hue and cry followed the event by the Iranian regime to support the move. Now, the announced decision to revert to the American Dollar by Iran's Central Bank (CBI) was treated a low level event. When Iran announced its decision at an OPEC meeting, other oil producing countries refused to follow Iran's lead in 2008, but Ahmadinejad insisted and made the switch. At that time, Iran took a loss from the switch in favor of Euro. This year as Iran returned to the Dollar, Iran took another 22 percent loss for its switch.

At an OPEC summit in 2008, Iran's foreign minister Mottaki and oil minister Nozari, along with Ahmadinejad, announced the country's switch from the US Dollar to the Euro despite the attempts by others to dissuade them from this. They said the proposal would only bring "laughter" from powerful OPEC members and discredit Iran. Ahmadinejad's advisors, however, had a different opinion and viewed their idea as a "revolution in oil relations."

As Ahmadinejad was reading his text and announcing the switch, objections to the idea rose in the hall. King Abdullah of Saudi Arabia left the session presumably to drink tea and coffee, while the heads of the United Arab Emirates, Bahrain and Kuwait followed him out. But Ahmadinejad continued.

BBC later reported that the Iranian president had referred to the dollar as a "worthless piece of paper" and called on oil deals to be conducted in another currency.

On May 31, 2010, Iran's Jam-e Jam daily reported that, "The CBI has begun to convert its reserves into the Dollar, as part of its effort to diversify the country's currency reserves."

According to the news report, "A plan has been prepared by the CBI in three stages, and has apparently been approved, the first part of which has begun this month. The plan seeks to eventually convert about 45 billion dollars of the country's foreign currency reserves into the US Dollar during the next 4 months. 15 billion Euros will be converted in the first phase of the plan."

Shortly after, the state-run Press TV confirmed the report.

The decision was reported while the Euro's value had dropped by more than 17 percent in the past two months, and the value of the US Dollar has increased by about 20 percent. In other words, the value of Iran's foreign currency reserves fell by about 17 percent as the US Dollar gained about 5 percent in value. Because of this change and return, Iran's central bank has taken a 22 percent loss in the value of its reserves.

The government's and banks' debts to the central bank dropped from 905,926 billion Rials (about 90 billion Dollars) in November of 2008 to about 776,486 billion Rials (about 77 billion Dollars) in November of 2009. According to CBI reports, the value of its assets fell by 11.6 percent during the last 12 months to 1,137,455 Rials in November 2009.

... Payvand News - 06/09/10 ... --


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