TEHRAN, Jan 1: Iran announced on Sunday that it had tested a new missile and made an advance in its nuclear programme after the United States unleashed extra sanctions that sent its currency to a record low.

The developments raised the stakes in a budding confrontation between the longtime foes, as concerns mounted that Iran could make good on threats to close the world’s most important oil route, the Strait of Hormuz, if it is backed into a wall.

Ten days of Iranian naval wargames are to climax on Monday with vessels practising “a new tactical formation” to be used to close the strait if so ordered, navy spokesman Commodore Mahmoud Mousavi was quoted as saying by the Isna news agency.

On Sunday, “for the first time, an anti-radar medium-range missile was successfully fired during the massive naval drills,” Mr Mousavi said.

The Iranian Atomic Energy Organisation followed that up with its own announcement that its scientists “tested the first nuclear fuel rod produced from uranium ore deposits inside the country.”

The statement suggested Iran had made progress in becoming a self-sufficient nuclear nation and had technological prowess the West thought it lacked.

It also fed into broader western fears that Iran’s real aim is to develop a capability to enrich uranium to the 90 per cent level necessary for a nuclear bomb, an ambition Tehran strongly denies.

Those fears are at the heart of the western push to halt Iran’s nuclear programme through successive sets of sanctions.

US President Barack Obama on Saturday signed into law the latest such package, measures targeting Iran’s central bank and financial sector.

Iran’s currency, the rial, slipped to a record low on Sunday on that news.

The state news agency Irna and an Iranian website tracking the currency said it slid to around 16,000 to the dollar.

President Mahmoud Ahmadinejad told an annual meeting of senior central bank officials that their institution was “the backbone of dealing with the enemies’ pressure.”

He said the bank “must with strength and self-confidence have the solidity to eliminate all of the enemies’ plots,” according to a statement on the presidency website.

The extra US sanctions aim to further squeeze Iran’s crucial oil sales, most of which are processed by the central bank. They will make foreign firms choose between doing business with the Islamic republic or the economically mighty United States.

Iranian leaders and military have warned that additional sanctions could push them to close the Strait of Hormuz at the entrance to the Gulf.—AFP