Â鶹ӰÊÓ

Iran test fired a surface-to-surface cruise missile Monday as part of ongoing war games in the Strait of Hormuz that come amid mounting international pressure and the threat of sanctions against the increasingly isolated regime.

The strait is the conduit for one-sixth of the world's oil supply, and Tehran seems intent on demonstrating its ability to control the waterway.

The missile "successfully hit its intended target" during the test, according to a release from the IRNA news agency.

The 10-day naval drill is Tehran's response to increasing criticism of the country's nuclear program and reinforces Tehran's threat that it could close the vital waterway altogether.

"The Strait of Hormuz is completely under our control," Iran's navy chief Adm. Habibollah Sayyari said after Monday's test.

"We do not allow any enemy to pose threats to our interests."

Christian Leuprecht, a professor at Queen's University, told Â鶹ӰÊÓ Channel the naval exercises are clearly intended as a show of force in the vital strait.

"Iran is trying to show they can control the strait and their waterways as well as any ships that go through it as well as any neighbours that might be trying to launch a retaliatory attack," Leuprecht said.

Over the course of the exercises the navy has tested surface-to-surface, surface-to-sea and sea-to-sea missiles with short to medium and long-range capabilities, Leuprecht said.

The exercises are a clear show of defiance against any international efforts to impose sanctions or an embargo as a nmeans of pressuring Iran to halt its nuclear efforts, he said.

"They're trying to show that even in the face of sanctions Iran is able to run its own research and development program and is able to continue its own weapons manufacturing,"  Leuprecht said. "To show sanctions aren't going to stop Iran from defending itself and running its own weapons industry."

The missile tested on Monday is called Ghader, which means capable in Farsi, and was an upgraded version of a missile that has already been in service.

The earlier version of the cruise missile had a range of 200 kilometres and could travel at low altitudes, The Associated Press reports.

Iran has said the missile is capable of destroying warships.

"In comparison with the previous version, the highly advanced Ghader missile system has been upgraded in terms of its radar, satellite communications, precision in target destruction, as well as range and radar-evading mechanism," said Rear Adm. Mahmoud Mousavi, a spokesman for the drill.

State TV on Monday showed two missiles being launched, and reports said two other missiles were also tested.

On Sunday, Iran test-fired an advanced medium-range surface-to-air missile called Mehrab, which means altar in Farsi.

There have been mixed reports over whether Iran intends to close the strait. While a leading lawmaker and a top official both indicated that is an option, military commanders more recently said the drill was "tactical" but that there were no plans to close the strait to traffic.

Meanwhile, Iran's currency hit a new low on Monday, after U.S. President Barack Obama signed a law that barred foreign countries or institutions from doing business with both the U.S. and Iran.

The bill, signed into law on Saturday, forces countries to choose whether to do business with Tehran or Washington and is intended to add pressure to the regime and its trading partners.

State radio said the Iranian currency's exchange rate hovered around 16,800 riyals to the greenback, marking a roughly 10 per cent slide compared to Thursday's rate of 15,200 riyals to the dollar.