US aims to make Iran's currency useless in global commerce

PUBLISHED : Saturday, 08 June, 2013, 12:00am
UPDATED : Saturday, 08 June, 2013, 3:00am

The US wants to make Iran's currency useless in global commerce through an executive order that gives financial institutions a July 1 deadline to stop dealing in rials or face sanctions, Treasury official David Cohen said.

US President Barack Obama issued the order on June 3, and "the purpose of the one-month phase-in period is to give financial institutions currently holding rials the opportunity to dump them", said Cohen, undersecretary for terrorism and financial intelligence.

"The idea is to cause depreciation of the rial and make it unusable in international commerce," he said. "On July 1 we will have the ability to impose sanctions on any foreign bank that exchanges rial to any other currency or that holds rial-denominated accounts."

The move is intended to toughen sanctions to press the Islamic republic to halt its nuclear programme. According to the Treasury, the rial has lost more than two-thirds of its value in the past two years, depriving Iran, the source of the world's No4 proven oil reserves, of a large portion of energy revenue.

Obama's order said the US would impose penalties on foreign financial institutions that knowingly conduct or facilitate "significant transactions" for the purchase or sale of the rial.