Bloomberg News

Iran to Raise Deposit Rates to Stabilize Gold, Currency Markets

January 12, 2012

Dec. 12 (Bloomberg) -- Iran’s central bank will increase the rates lenders pay on deposits, as it seeks to control volatility in the gold and foreign currency markets, the official Islamic Republic News Agency reported.

“The council has decided to fix the rates for bank deposits at a rate higher than inflation,” currently 20.6 percent, Kazem Delkhosh, a member of the central bank’s Council of Money and Credit, was quoted as saying by IRNA yesterday. The decision will be announced to banks next week, he said.

Iranians have been rushing in past weeks to buy gold and dollars, sending the rial currency plunging, on concern the government may be unable to maintain economic stability as international sanctions tighten. The U.S. and European Union are moving toward an embargo on oil purchases and restricting dealings with its central bank as they seek to pressure Iran over its nuclear program.

The rial has lost almost 30 percent of its value in less than three months, according to rates in Tehran’s currency bazaar, the main unofficial venue for foreign exchange transactions. Today’s market rate is 16,900 rials per dollar, while the central bank’s official rate is 11,262 rials.

Central Bank Governor Mahmoud Bahmani had made two previous requests to increase bank deposit rates in the current Iranian calendar year, which began in March, and both were turned down, IRNA said.

Rates range from 12.5 percent on one-year deposits to 15 percent for five years, according to the central bank.

--Editors: Ben Holland, Louis Meixler.

To contact the reporter on this story: Ladane Nasseri in Dubai at lnasseri@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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