INTERVIEW-No "serious dent" from sanctions-Iran cenbank chief

Randy Fabi and Aisha Chowdhry
Reuters Middle East

* Iran avoids "serious dent" to economy from sanctions

* Iran gold reserves 12 times larger than 5 yrs ago

* Iran inflation at 20 pct, no need to raise rates

* Cenbank gov says does not want to see higher oil prices

ISLAMABAD, Nov 21 (Reuters) - Iran has avoided a "serious

dent" to its economy from Western sanctions thanks to large gold

reserves, high oil prices and reduced foreign imports, its

central bank governor told Reuters on Wednesday.

Gold reserves were enough to last 15 years, Mahmoud Bahmani


He added that inflation was running at 20 percent but that

there was no need to raise interest rates.

Western nations have imposed their toughest sanctions to

date against Iran in an attempt to halt its disputed nuclear

programme, causing the rial to plummet, inflation to jump and

hundreds of thousands of Iranians to lose jobs.

"We can't say that sanctions did not damage us. They did,

but we thrashed out plans to control the damage and were able to

avoid a serious dent to our economy," the central bank chief

said in a rare interview.

He was speaking on the sidelines of a summit of developing

nations in Islamabad.

Despite the economic impact from the sanctions, Iran has not

backed down from its nuclear programme and there were signs

Tehran could be building up its capacity even further. That has

sparked growing concerns in Israel, which has threatened to bomb

Iranian installations.

Officials from six world powers -- Britain, China, France,

Germany, Russia and the United States -- were meeting in

Brussels on Wednesday to plan for a possible new round of talks

with Iran, the latest effort to resolve a decade-long standoff.

Iran denies international accusations it is seeking nuclear

weapons and has so far refused to meet demands to scale back its

atomic activity, insisting on immediate relief from sanctions.


To help protect its economy, Iran has built up its gold

reserves over the last few years with its current holdings 12

times larger than five years ago, Bahmani said. He declined to

give a specific amount since the government does not disclose

such information.

"We believe that these reserves are enough for us for the

next 15 years, even if we don't import foreign gold," he said

through a translator.

The country's official reserves, which include foreign

currencies and gold, totalled $106 billion at the end of last

year, according to the International Monetary Fund.

Some analysts believe the official reserves may have shrunk

by several tens of billions of dollars this year because of


In October, Iran prohibited gold exports without central

bank approval, in an effort by the government to restrict

outflows of wealth. The government also banned the export of

about 50 basic goods, including wheat, flour, sugar and red

meats, as well as aluminium and steel ingots.

Bahmani refused to speak about Iran's foreign exchange


He added that Iran does not use its gold reserves as a

bartering tool in exchange for foreign goods, despite sanctions

that bar Tehran from using U.S. dollars and euros in financial


The sanctions have slashed Iran's oil export earnings and

triggered a rush by Iranians to change their savings into

foreign currency, dragging the rial down by two-thirds in 15

months and boosting inflation.

Inflation in Iran was running at around 20 percent, Bahmani


"It's a temporary high rate of inflation in Iran and we are

trying our best to control the level and bring it down to its

real value in the near future," he said, adding he did not see a

reason to raise interest rates.

High oil prices have helped limit the drop in revenue from

lower crude exports. Bahmani said Iran did not want to see oil

prices to rise further because of its potential impact on the

global economy.

Brent crude traded up more than a dollar on

Wednesday to above $111 a barrel, supported by clashes between

Gaza and Israel.

(Additional reporting by Jan Harvey in London; Editing by

Michael Georgy. Editing by Jeremy Gaunt.)

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