Iran's Ahmadinejad ups rates to stem money crisis

January 25, 2012 13:34

TEHRAN - Iranian President Mahmoud Ahmadinejad agreed to increase bank interest rates on Wednesday, hoping to halt a spiraling currency crisis intensified by new Western sanctions.

"The economy minister has announced Ahmadinejad has agreed with the approval of the Money and Credit Council to increase interest rates on bank deposits to up to 21 percent," the official IRNA news agency reported.

Sanctions the United States and the European Union announced over the last month - targeting Iran's vital oil exports and its central bank - exacerbated fears about the economy and worsened a dash for hard currency.

The rial was already losing value since a decision last April to cut interest paid on bank deposits to a range of a 12.5-15.5, below inflation which is currently around 20 percent, prompting many Iranians to withdraw savings and buy gold and foreign currency and pushing up the price of both.

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