Bahmani Assigned as New Central Bank Chief

TEHRAN (FNA)- President Mahmoud Ahmadinejad appointed the Central Bank of Iran General Secretary Mahmoud Bahmani as CBI’s new governor.

Former CBI chief Tahmasseb Mazaheri, who was replaced by his general secretary, was the second CBI governor to resign within President Mahmoud Ahmadinejad’s three-year presidential tenure. The first, Ebrahim Sheibani, resigned in August last year.

In his decree, Ahmadinejad called on Bahmani to increase the country’s economic growth and value of the national currency, Rial.

Mazaheri initiated last month a three-month currency reform process with the aim of knocking off three or four zeroes from the national currency.

Upon his order, the central bank printed new 50 and 100 Rials, replacing the previous 500,000 ($518) and one million Rial ($1,036) bank cheques.

Mazaheri also issued a directive to allow banks to raise interest rates on deposits above current rates.

The governor had said the directive would go into effect at the end of the Iranian month of Mehr (October 21), but following Mazaheri’s replacement, implementation of the directive has now come under a thick cloud of doubt.

Current bank deposit rates are below the rate of inflation that reached 27.6 percent for the 12 months prior to August 21, 2008. This has led to fewer deposits as investors speculate in a booming real estate market.

Media reports suggest there was disagreement between government officials who want to keep interest rates low to stimulate business and Central Bank officials who favor deflationary policies.

Chairman of parliament’s Economic Commission, Gholam Reza Mesbahi Moghadam, in an interview with FNA, expressed regret over the departure of Tahmasb Mazaheri from the CBI.

“The change of the CBI was not desirable and I believe this change shouldn’t have taken place,” he said.