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Iran's president blames currency nosedive on 'psychological pressures'

Iranian president Mahmoud Ahmadinejad downplayed criticism that the steep plunge in Iran's currency, the rial, is due to government mismanagement of the economy, instead blaming Western sanctions.  

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Vahid Salemi/AP/File
In this January 2012 photo, an Iranian street money changer holds Iranian banknotes with a portrait of late revolutionary founder Ayatollah Khomeini, in the main old Bazaar of Tehran, Iran.

Iran's聽president on Tuesday blamed the steep drop in聽Iran's聽currency on "psychological pressures" linked to Western聽sanctions聽over Tehran's nuclear program and聽Iran's聽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聽Iran's聽economy as it struggles with tougher聽sanctions聽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聽sanctions.

The rial's sharp decline is attributed to a combination of Western聽sanctions聽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聽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聽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聽sanctions聽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聽Iran聽has enough hard currency to meet the country's needs. Iranian officials also have insisted that聽Iran聽can ride out聽sanctions聽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.

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