Iran currency - AP - Archive
A foreign exchange trader displaying Iranian rials and US dollar currency notes at a street stall in Tehran, Iran, on Thursday, Jan. 12, 2012. Photo by AP
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An Iranian semi-official news agency says the country's currency has hit a record low against the U.S.¬ dollar in street trading.

Mehr says the rial dropped nearly 7 percent in a single day, to 24,300 rials to the dollar. Street traders say the rial rose slightly later Sunday to around 23,900 rials to the dollar.

The collapse of the currency is a sign of the effect of Western sanctions over Iran's nuclear program. The West suspects Iran is aiming to build nuclear weapons. Iran denies that.

On July 1, the European Union banned import of Iranian oil, and the U.S.¬ tightened sanctions against Iran's banks.

The current official rate is 12,260 rials to the dollar, used only for special purposes such as importing food and medicines.

Mehr's report came after the French and German foreign ministers announced on Friday that the European Union is drafting a new round of sanctions on Iran, lamenting the lack of progress in negotiations over the Middle Eastern country's nuclear program.

French Foreign Minister Laurent Fabius said the new restrictive measures would target "financial, commercial and oil aspects." Something concrete should be ready in time for the next United Nations General Assembly in 10 days, he said. while German's Guido Westerwelle spoke of adopting the sanctions around October 15.

"The negotiations are treading water," Fabius told reporters after meeting with his EU counterparts at an informal gathering in Cyprus. An Iran with nuclear weapons is an "unacceptable, extremely dangerous" prospect, he added.

Westerwelle said he is "very worried about the lack of progress in the nuclear negotiations," stating that "any talks and negotiations that only amount to a delay" will be unacceptable. We will not accept a nuclear arming of Iran."

Westerwelle told Reuters on the sidelines of a meeting that "Sanctions are necessary and soon. I can't see there is really a constructive will on the Iranian side for substantial talks."

"If they will not come back to the table, then probably the next round is necessary. This is not something for next year, we are talking about next weeks," he said.