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Cabinet minister contradicts Iranian gold claim

Section: Daily Dispatches

By Parisa Hafezi
via The Guardian, London
Wednesday, November 19, 2008

TEHRAN -- Iran is not converting reserves into gold, a cabinet minister said in remarks published on Wednesday, contradicting comments by an aide to the country's president.

"It is not correct that Iran is transferring its reserves to to gold," Economy Minister Shamseddin Hosseini was quoted as saying by the business daily Poul.

Presidential adviser Mojtaba Samareh-Hashemi had been quoted on Saturday by the same newspaper as saying the reserves had been converted to avoid future problems.

Central bank officials in the past said Iran was switching reserves into currencies other than the U.S. dollar because of U.S. and U.N. sanctions. They have also said the bank held some reserves in gold. But they have not usually given a breakdown.

Before oil prices plunged by more than 60 percent from a peak of $147 a barrel in July, Iran made windfall gains from its crude exports and in April estimated its foreign exchange reserves at about $80 billion.

But President Mahmoud Ahmadinejad's government has been criticised for not saving more of the gains to prepare for tougher times, such as now, when crude prices have plunged below $55 a barrel.

The International Monetary Fund said in August that if the price of Iranian crude fell to $75 a barrel, Iran would face a current account deficit in the medium term that would be tough to ride out due to Tehran's financial isolation.

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