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Iran Says It Lost $13.2 Billion In Financial Crash

November 3, 1987

NICOSIA, Cyprus (AP) _ Sliding stock prices worldwide and a weakening dollar cost Iran $13.2 billion during the second half of October, Tehran Radio reported.

The official radio on Monday quoted Majid Qassemi, the governor of Iran’s central bank, as saying that because of the dollar’s slide oil-producing countries should stop using the currency to gauge oil prices.

Because of the dollar’s loss in value, ″our foreign currency income in 1986, compared to 1981, decreased by half,″ Tehran Radio quoted him as saying.

A devalued dollar is harmful to countries with large dollar deposits such as Iran because it slashes their purchasing power in countries other than the United States.

Majid Qassemi made the disclosures at a news conference Sunday, the radio said, although it did not elaborate on Iran’s reported losses.

Iran’s first deputy Economics Minister, Ali Majedi, on Monday repeated the call for a divorce of the dollar from oil prices, reported Iran’s official Islamic Republic News Agency, which also was monitored in Nicosia.

It was the third time in a week the Iranians have called for linking oil prices to Special Drawing Rights, or SDR, a reserve currency held by the International Monetary Fund and member central banks.

Iran’s political council, an inner cabinet body headed by Prime Minister Hussein Musavi, called last week for a switch to SDR, a composite of the dollar and other major currencies that is worth a little more than a dollar.

Oil is the lifeblood of Iran’s economy, which has been battered by seven years of war with Iraq.

Tehran’s export revenues have slipped badly in the last 18 months because of the slump in oil prices, Iraqi attacks on its oil centers and tankers and the dollar’s slide.

IRNA quoted Majedi as saying Iran wants to ″stabilize its foreign exchange reserves″ by basing its deposits, mainly derived from oil, on the SDR system.

He charged that the stock market crash Oct. 19 triggered an acute economic crisis in the United States and claimed the Reagan administration is seeking to keep the dollar’s value down ″in a vain bid to somehow reduce the U.S. trade balance deficit.″

The Swiss-based Bank of International Settlements reported in August that Iran’s deposits in foreign banks totaled $5.1 billion, down from the record $7.5 billion posted at the end of 1985.

Other oil ministers in the Organization of Petroleum Exporting Countries have voiced support for Iranian efforts to hike the price of oil to offset the drop in the dollar’s value. But Saudi Arabia has opposed increasing the OPEC benchmark price above the current level of $18 a barrel, charging it would destabilize the oil market.

Efforts to divorce oil prices from the dollar to a basket of currencies, not necessarily SDR, have failed. OPEC attempted it twice in the 1970s when the dollar was weak.

Financial analysts say such efforts have failed largely because the United States is the world’s largest oil importer and is unlikely to abandon the dollar as its pricing basis for crude.

Update hourly