Iran c.bank says can weather sanctions

By Liau Y-Sing

KUALA LUMPUR (Reuters) - Iran's economy can withstand U.N. sanctions and the country has enough foreign reserves to handle any major shocks, the Iranian central bank chief said on Tuesday.

Ebrahim Sheibany told Reuters on a visit to Malaysia that Iran had also now cut its holding of U.S.-dollar assets to the minimum level, around a fifth of foreign reserves.

"In dollars now, it is at a minimum level, maybe around 20 percent because we need to keep that," Sheibany said in an interview on the sidelines of an Islamic finance conference.

The United Nations imposed new sanctions on Iran on Saturday because of Tehran's refusal to agree to U.S.-led demands to halt its nuclear program. The sanctions target Iranian arms exports and 28 Iranian individuals and entities, and there is the threat of wider sanctions if Iran does not comply within 60 days.

Sheibany described the new sanctions as largely symbolic and said they posed little threat to Iran's oil-led economy.

"I do not think that there is any, or there will be, any effect or adverse effect on Iranian economy because the new sanctions are limited to some areas, which are not much related to our economy," he said.

He did not give a total reserves figure but said they stood at a record high. Asked if they were enough to cope with any major shocks, he added: "We can service our debt very well. Our debt-service ratio is very good and so there is no reason for us to worry about that at all."

Iran has been steadily shifting its foreign reserves away from dollars into other currencies such as the euro, a move Sheibany said was partly a response to U.S. hostility toward Tehran.

"At the time being, because of American hostility toward Iran, we are distancing from dollar," he said.

"In the future of course, it depends. We are diversifying our reserves in different currencies," he added when asked about the central bank's long-term reserve allocation for dollars.

Iran has been asking overseas buyers of its oil to pay in euros rather than dollars, a tactic that is being closely watched by foreign-exchange markets.

"That's our policy and right now we are doing that," Sheibany added. "I think that this is bad for America and the importers. As I say, I believe that they are shooting their own foot because they have international currency and they should take care of that. If not, we are shifting to other currencies."