Syria's war-battered pound floats on rebel funds

Sun Dec 23, 2012 8:03am EST
 

By Suleiman Al-Khalidi

AMMAN (Reuters) - In Syria's eastern town of Deir al-Zor, a rebel commander flush with cash was swapping his dollars for Syrian pounds to pay fighters battling President Bashar al-Assad's forces.

Money changers said that influx of foreign currency earlier this month helped push the pound's black market rate in the impoverished town up by at least 10 percent.

Hundreds of kilometers away in Damascus, panicked Syrians bracing for more violence sold pounds for dollars, driving the pound, which has lost half its value since the anti-Assad uprising erupted in March last year, the other way.

The events at opposite ends of the country illustrate the contrasting pressures on a currency whose sharp decline has been cushioned by factors including central bank intervention, flows of cash from Assad's friends and foes abroad, and even long term hopes for a wave of foreign investment if Assad were to fall.

By comparison, Iran, Assad's staunchest regional ally, has seen its own currency fall more sharply than Syria's, losing about two-thirds of its value since June 2011 because of Western sanctions imposed over Tehran's disputed nuclear program.

Damascus-based currency dealer Abdullah Abu Saloum, who also has an office in Deir al-Zor, said the rebel fighter's cash was one of many anomalies affecting Syria's foreign exchange market.

"There was a large quantity of dollars that were offered for sale at an attractive price," he said, adding ruefully that he was not able to capitalize on the opportunity because the ongoing violence, which has killed more than 40,000 people, prevented him transferring pounds from Damascus to Deir al-Zor.

"When problems grow, people decide to buy dollars, not sell dollars, but this is what Syria's conflict is producing -- all types of distortions and contradictions."   Continued...

 
A cashier counts Syrian currency notes in Amman December 6, 2011. REUTERS/Ali Jarekji