Syria’s pound has recovered about 40 percent against the dollar in the past month, gains that Central Bank Governor Adib Mayaleh said were due to the waning risk of a U.S. strike and government intervention.
The pound gained to 175 a dollar Sunday in the black market, according to the state-run Al-Thawra newspaper, compared with a low of 275 on Aug. 29 when the U.S. was mulling military action against the alleged use of chemical weapons by Syrian government forces. The currency strengthened to about 170 a dollar today, according to a local currency website and a trader in Beirut who asked not to be identified.
“We have emerged from the bottleneck,” Mayaleh said in a telephone interview from Damascus Monday. He said the threat of a military attack was a “big” psychological factor behind the weakening of the pound.
The U.S. and Russia agreed to dismantle Syria’s chemical weapons, averting an American strike against forces of President Bashar Assad, who is fighting an armed rebellion against his rule. The deepening conflict, which began March 2011, as well as international sanctions have battered Syria’s economy, with inflation accelerating to 68 percent in May.
Mayaleh said the currency gains also show that the central bank has tools to shore up the currency. He declined to disclose how much foreign reserves were at his disposal, saying only that they were “enough to defend the pound.” The Economist Intelligence Unit estimated that the reserve would shrink to $3 billion by the end of the year from $19.5 billion at the end of 2010.
Syria has taken a series of measures to stem the decline of its currency, which had plunged as low as 345 a dollar in July. Assad banned the use of foreign currencies for payments, threatening offenders with three years in prison. Syria’s 15 private banks have been allowed to sell dollars to citizens at 175 pounds to the dollar. Syrians can only buy as much as $10,000 a year each for noncommercial purposes.
The government also signed two agreements with Iran, one of them a $3.6 billion oil credit line. The Islamic Republic, an ally of Assad, has also offered $1 billion in loans to help Syria import goods, an agreement that “can be expanded,” Mayaleh said in August.
Assad denies any involvement in the Aug. 21 chemical attack that the U.S. said killed more than 1,400 people. Syrian authorities have been efficient in preparations for the team of inspectors of the Organization for Prohibition of Chemical Weapons, that will arrive in Damascus Oct. 1, OPCW officials told reporters in The Hague Sunday, asking not to be identified for security reasons.
A “big” war has been waged on Syria and the “first signs of victory” can be seen in the economy, Mayaleh said.