The Syrian currency is at its weakest level since the beginning of political unrest, dropping 30 percent against the US dollar. Further weakness is expected amid the escalated tension as the sanctions begin to bite.
The Syrian pound fell almost 20 percent against the dollar immediately after economic sanctions were imposed on the Syrian regime this week. The currency dropped from 47 Syrian pounds to 61 pounds against the US dollar. The Arab League on Sunday slapped stringent sanctions on Syria in the strongest blow yet to Al Assad’s regime.
Dr. Mohammad Al Asoomi, a leading economist in the UAE, told Gulf News, “The league’s suspension of dealings with the Syrian central bank will be the most effective measure. This will cut the money lifeline that Syrian businesses have to trade with the Arab world in particular. Moreover, it will allow the migration of capital from Syria.”
The League’s sanctions, which have affected transactions with Syria’s central bank, come with a threat to freeze Syrian assets in other Arab states, and Arab investments in Syria. They also imposed a travel ban on senior Syrian officials.
Arab finance and economy ministers have stressed the need to avoid measures which would harm ordinary citizens. Basic commodities and cash remittances from Syrians working abroad are exempt.
Qatar’s Prime Minister Shaikh Hamad Bin Jasem Bin Jabr Al Thani, who chaired the Cairo meeting, made the announcement. Bin Jasem said the decision, which takes immediate effect, was backed by 19 of the league’s 22 members.
The Syrian pound lost 17.18 percent of its value against the UAE dirham. The exchange rate was 12.8 pounds to the dirham, but is now 15 pounds to the dirham. Rami, a Syrian resident in the UAE, said that the exchange rate is good. “This is of course good for the people who live outside Syria,” he said.
Rami added that even though remittances are not affected by the sanctions, he is still sending more money home. “I am sending big amounts due to uncertainties back home.”
Adnan Ahmad Yousuf, head of the Union of Arab Banks and President and Chief Executive of Al Baraka Banking group, said the growing political unrest has lowered demand and the currency continues to lose vlaue.
Yesterday Syrian security forces raided several exchange shops across the country, accusing them of selling dollars at different exchange rates. The sanctions are expected to raise inflation.
Another Syrian resident in the UAE, Abdul Rahman, said: “There is no advantage in the Syrian pound’s decline, because as much as the Syrian pound is dropping, living costs in Syria are getting too expensive and I have to send more money to meet my family’s needs.”
The European Union halted imports of Syrian oil, which account for 90 percent of the country’s revenues, causing it to lose about $400 million (Dh1.5 billion) a month.
Abdul Hameed Radwan, a leading economist in the UAE Ministry of Foreign Trade, told Gulf News that US sanctions have crippled Syria’s financial sector by prohibiting any individuals or institutions based in Syria from executing international transactions in US dollars. It is estimated that the Syrian economy will shrink by 6 percent this year, he added. He added that the decline is a reflection of investors pulling out money from the country and converting local currency into US dollars or other foreign exchange, in fear of further declines in exchange rates. Indeed, the crisis has pushed stock indexes into the red. Syrian investors have put their projects on hold.
Syrians are now buying foreign currencies on a scale that threatens the country’s economy, and the demand for the Syrian pound in other Arab countries is declining fast.
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