Fitch cuts Iran rating, cites risk of sanctions

LONDON, Apr 24 (Reuters) Ratings agency Fitch (UK) on Monday cut Iran's foreign currency rating to 'B+' from 'BB-', citing escalating tensions with the international community over the oil-rich country's nuclear programme.

The agency said that while economic sanctions against Iran were still some way off, the risks were increasing, leaving the economy vulnerable, especially in case of an oil price fall.

''The downgrade reflects the escalating confrontation between Iran and the international community over Iran's nuclear programme,'' Richard Fox, Head of Middle East and Africa sovereign ratings at Fitch (UK) said in a statement.

''Material sanctions are still some way off, but the risk is increasing and events are becoming increasingly unpredictable,'' Fox said, but noted that the Stable outlook partly reflects high oil prices that are keeping Iran's external position strong.

Tensions over Iran's uranium enrichment programme have helped push oil prices to record highs above a barrel in recent days.

Fitch noted that structural reform momentum had also slowed appreciably at a time when the windfall of higher oil prices provides an opportunity to intensify reforms. Iran is also more vulnerable to oil price falls than its peers, the agency added.

Iran is not rated by US agencies Standard&Poor's and Moody's.

REUTERS ARB HS1555