AMMAN – A pledge by Syria's central bank on Sunday to take action to support the pound is already looking hollow, raising speculation the authorities may no longer be willing to burn up reserves defending the currency. The pound has plunged by nearly a quarter this month against the dollar since rebels seized vast areas of the oil-rich northeast region, prompting more Syrians, fearful of the economic outlook, to convert pounds into foreign currency. The pound, which is only traded in Syria and neighboring Jordan and Lebanon and mostly on the black market, hit a record low of 226 to the dollar last Wednesday on the black market and has stayed close to that level this week, local financial sources said on Wednesday. Central bank Governor Adeeb Mayaleh, in an interview on Sunday, blamed the pound's fall in the black market on speculators, whom he compared to insurgents waging a war against his sanctions-hit country. He vowed to take action to support the currency. "People once they get a bit more afraid rush to change their pounds into foreign currency. There is no economic factor at play, it's just psychological. There are many measures we will take to help the pound recover," Mayaleh said in the interview on state television. He did not elaborate on what those measures might be and the absence of any action this week to halt the pound's slide has sparked rumours that the central bank is now prepared to let the currency fall. Defending it would mean burning up more foreign currency reserves, which have been depleted by a slump in tourism and oil revenues and by previous efforts to prop up the currency. Syria's foreign reserves were estimated by officials and independent economists at $17 billion before the uprising against President Bashar Al-Assad's rule began two years ago. Some bankers estimate they are now as low as $4 billion. On Tuesday Mayaleh met licensed exchange dealers and financial institutions, but there was no public announcement after the meeting, adding to market speculation that action was not imminent. "After Mayaleh's first appearance in months and his outward confidence, people were expecting strong intervention but this has not materialized, worsening the pound's plight," a dealer at one of the 30 leading licensed exchange houses in Damascus said by telephone. After being relatively stable for months, the pound has fallen sharply since rebels seized the provincial city of Riqqa in eastern Syria on March 4, giving them control of much of the northeast region, home to all of the country's oil production and most of its grain output. Several currency dealers in Damascus contacted by telephone said the pound was trading between 115 and 120 to the dollar on Wednesday on the black market, while the official rate was 97 to the dollar. Exchange dealers in Jordan and Lebanon use rates close to black market rates in Syria. Paradoxically, dollars finding their way into rebel-held areas of Syria is preventing a faster fall in the pound. Civil war now rages in most of Syria's provinces and the United Nations says 70,000 people have been killed. Bankers and dealers said the pound has lost more than half of its value since the uprising began in 2011, when the currency stood at 47 pounds to the dollar. – Reuters
