A senior Central Bank of Iran official has denied rumors that the bank's governor has resigned, the ISNA news agency reported Saturday, in a week when the currency hit a record low amid rising inflation and concerns about tighter economic sanctions.

Mr (Mahmoud) Bahmani will remain firmly in his job and whoever has published this false report has made a mistake, ISNA quoted a deputy central bank governor, Ebrahim Darvishi, as saying.

ISNA did not specify where the rumour had been published.

Bahmani has been at odds with President Mahmoud Ahmadinejad over the appropriate policies to control inflation, and has been unable to counter political resistance in order to raise interest rates on bank deposits that were lowered to below-inflation levels in April.

With Iranians pulling out their savings and seeking to buy foreign currencies, Iran has been unable to preserve the value of the rial, which has been under pressure since the rate cut.

New U.S. sanctions approved by President Barack Obama on New Year's Eve caused a fresh run on the rial, pushing it down to 18,000 to the dollar Tuesday from around 13,500 rials in December.

The central bank injected more dollars into the market on Wednesday, aiming to rein it back to 14,000 rials, but on Saturday it was back close to 16,000 rials on the open market.

A medium-term fall in the rial could have severe consequences for inflation, already officially at just under 20 percent and rising, as imported goods will become more expensive.

Sanctions that make it harder for Iranians to access international banking services have already added to the cost of imports, and a weakening rial will worsen the situation in a country that is heavily reliant on imported manufactured goods.

Washington is leading an international push to impose sanctions over Iran's nuclear research program. Major Western powers fear the program is aimed at making atomic weapons, although Iran says it is purely for peaceful purposes.

(Reporting by Hossein Jaseb; Writing by Robin Pomeroy; Editing by Kevin Liffey)

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