Syria devalues currency as new U.S. sanctions hit

DAMASCUS, Syria – Syria’s central bank devalued the Syrian pound on Wednesday, June 17, giving in to weeks of depreciation on the black market as new United States sanctions took effect.

The central bank raised the official exchange rate from around 700 to 1,250 Syrian pounds to the dollar, in statements published on its social media pages. The previous rate had been in force since March.

“The exchange rate for financing imports has become 1,256 Syrian pounds to the dollar, and the buying price for transfers from abroad 1,250 Syrian pounds,” it said.

The devaluation comes as the US prepares to implement new sanctions this week under the Caesar Act, targeting foreigners doing business with the Damascus government, including for the reconstruction of the country.

The central bank said the adjustment aimed to “bridge the gap between the market rate and the rate for transfers.”

It said it came in view of the temporary state of “the national economy after the ramping up of…economic measures against the Syrian people through the so-called Caesar Act” and “the economic crisis in Lebanon.”

Syria’s economy has been battered by 9 years of war, and is now reeling from the knock-on effects of a financial crisis in neighboring Lebanon that has stemmed the flow of dollars into government-held areas.

‘Use official channel’

On Wednesday, the rate on the parallel market stood at around 2,600 to 2,800 pounds to the dollar, traders told Agence France-Presse.

Earlier this month, the war-torn country’s currency hit a record low on the black market of around 3,000 pounds to the dollar, sparking rare protests, before appreciating slightly after an apparent injection of dollars.

Analysts have said that low was likely due to worries ahead of the introduction of the new US sanctions, and the sudden fall from grace of tycoon and cousin of the president, Rami Makhlouf, which has set other top businessmen on edge.

Zaki Mehchy, a senior consulting fellow at the London-based Chatham House think tank, said that, with its latest adjustment, the central bank was trying to minimize the gap between the official and black market rates.

“It is trying to encourage people to use the official channel instead of the black market,” he said.

But the pound would probably continue its slide, punctuated by short periods of appreciation, he added. 

The Damascus government has long blamed the country’s economic crisis on international sanctions.

Last week, President Bashar al-Assad sacked his prime minister of 4 years after criticism of the government’s handling of the crisis.

Before the conflict, the exchange rate stood at 47 Syrian pounds to the dollar. – Rappler.com