* Black market dollar price up 50 percent month-on-month
* Sanctions, inflation fear push Iranian towards forex, gold
* Rial now worth almost half the official rate
TEHRAN, Jan 23 Iran's rial currency
plunged 10 percent to a new record low on Monday as the EU
imposed a ban on Iranian oil imports, posing a major headache
for President Mahmoud Ahmadinejad who has said sanctions will
not hurt the economy.
European Union governments agreed to an immediate ban on all
new contracts to import, purchase or transport Iranian crude oil
and petroleum products, EU officials said, in a move aimed at
ramping up pressure on Tehran to curb its nuclear activities.
The ban, which comes on top of new U.S. sanctions aimed at
hampering Iran's oil exports around the world, sent Iranians
rushing to convert their savings into hard currency as efforts
to curb black market trading failed.
The price of dollars rose 7 percent from Saturday, the last
working day, to 20,500 rials, up 15 percent from last week. It
has rallied almost 50 percent from a month ago, according to the
financial website Mesghal.
The rial's slide is likely to exacerbate inflation which is
already at 20 percent and rising, as Iran is heavily reliant on
imported consumer and intermediate goods whose prices have
surged as the rial has depreciated.
Monday's black market dollar price was 80 percent more than
the central bank's official "reference rate" of 11,300 rials - a
rate not available to normal Iranians or most importers.
GOLD A SAFE HAVEN
The rial had been weakening for several months
after a decision last April to reduce interest rates on bank
deposits to below the inflation rate. However, new economic
pressures from Washington and Brussels have greatly accelerated
The EU said on Monday it was also freezing the assets of
Iran's central bank and was banning trade in gold and other
precious metals with the bank and state bodies.
Iranian media said policies aimed at stemming the
currency slide had had the perverse impact of driving dollar
prices higher as Iranians were forced to seek hard currency
through touts rather than official exchange offices.
A government demand that exchange offices sell dollars at no
more than 14,000 rials has meant they stopped selling at all
while blackmarket prices soared along with that of gold coins
which, like hard currency, are seen as a safe haven for wealth
during times of economic uncertainty.
Earlier this month, the state banned people from trading
currencies outside officially licensed exchange offices - where
rates can be subjected to government controls - and threatened
to prosecute people carrying foreign cash without a receipt to
show they bought it legally.
"This is why the price of gold coins is increasing rapidly,
people cannot find dollars at the official rate ... so they
invest in gold coins," Khorasan daily quoted a member of
Tehran's gold, jewelry and silver industry association, Hossein
Pendarvand, as saying.
"The fact that the central bank is now treating trade in
dollars on the open market as smuggling is one of the reasons
demand for gold coins has increased," Pendarvand said.
Mesghal put the price of the Iranian Azadi coin, produced by
the Central Bank of Iran and weighing 8.133 grams, at around
10,100,000 rials on Saturday, up 3,150,000 rials, or 45 percent,
on last week.
Iran is the world's No. 5 oil exporter and analysts say
sanctions on the country's oil income will put further pressure
on the ailing economy even though Ahmadinejad has said they will
not hurt the economy.
(Reporting By Mitra Amiri; Editing by Susan Fenton)