Syrian pound unfazed by turmoil
A sharp discrepancy between Syria's crashing economy and its relatively stable currency is fuelling speculation among observers that either another country, presumably strategic oil-rich ally Iran, has injected huge amounts of cash into its economy, or Damascus is quickly draining its foreign currency reserves.
Syria's overall economy, stock market, vital tourism industry and foreign investment have collapsed, according to economists and analysts. It appears to have haemorrhaged cash, with the bulk flowing to Lebanon, which has long served as a conduit for Syrian finances.
But its currency, the Syrian pound, has held strong, staying at about the same rate as before the uprising against President Bashar Assad began five months ago.
The disconnect between the teetering economy and the stable currency, which remains vital for keeping the country's urban merchant class a pillar of support for the regime, has baffled some observers and led to speculation about possible influxes of cash.
"You have the collapse of exports and the collapse of foreign direct investment," said a Western diplomat in Beirut who closely tracks the Syrian economy and spoke on condition of anonymity. "Given the fact that the currency has not collapsed, the indications are that money is coming in. No one knows from where, or how much."
Many economists and officials agree that, up until the uprising began, Syria's prospects were relatively good, with many predicting a banner year for the country thanks to an uptick in tourism, investment from Iran and the Arabian Peninsula kingdoms, and increased trade with Turkey.
But the political crisis engulfing the country has changed all that. Its gross domestic product, earlier projected to weather the global economic crisis and grow 3%, will instead probably shrink 5% or more. Tourism, which accounted for $4 billion annually, or 12% of its economy, has collapsed.
Syria may have also begun drawing on extensive reserves that officials said had reached $17 billion, built up over the decades to keep its currency solid and the merchant class supportive — or at least quiet about the crackdown against the protest movement.
Though Syria exports $4 billion in crude oil annually, it also imports about the same in refined petroleum.
As the Syrian crisis erupted, every Syrian was requested to support the national currency and redeposit what had been withdrawn at the start of the crisis. The financial authorities implemented procedures that helped the campaigns supporting the Syrian Lira. Syrian bankers believe the campaign successfully saved the Lira and strengthened its foundations, although opponents say the risk still exists.