Syria’s move Wednesday came as the currency hit a record low, reaching SYP 310 to the dollar compared with SYP 47 to the dollar when the country’s crisis began 28 months ago.
The record drop of the pound happened on the first day of the Muslim holy month of Ramadan, when observing Muslims abstain from food, drinking, smoking and sex from dawn to dusk. Many Syrians found it difficult this year to buy some food because of soaring prices in the markets.
SANA said the government approved a bill Wednesday that criminalizes business deals in currencies other than the pound, with penalties ranging from three to 10 years in prison.
The bill also seeks to prevent manipulation of prices in the market and “curb (the) exploitation of citizens’ needs,” SANA said.
SANA also quoted Central Bank Governor Adib Mayyaleh as saying that the monetary regulator sold USD 50 million to foreign exchange companies Wednesday at the rate of SYP 247.5 to the dollar. The official rate still stands at SYP 104 to the dollar, though it is widely ignored even by the state.
The pound was trading Thursday at SYP 260 to the dollar, a day after the exchange rate fell to SYP 310. The currency began a sharp descent last month after the US decision to arm Syrian rebels.
A recent report by the International Crisis Group suggested that though the Syrian pound faces increasing pressure, it “has not entirely collapsed.”
“Authorities still distribute salaries to public servants and fund the military-security apparatus,” the report said.
Syria is believed to have relied heavily on Iran to support its economy. Iran reportedly supplied Assad’s regime with billions of dollars since the crisis began in March 2011.
The Syrian civil war has killed more than 93,000 people, according to the United Nations, and displaced millions of people. The northern city of Aleppo, Syria’s once commercial center, has witnessed deadly fighting, shelling and air raid since July last year.
When the conflict began, the government had some $17 billion in foreign currency reserves. But that figure has dropped from blows to two main pillars of the economy: oil exports, which used to bring in up to $8 million per day, and tourism, which accounted for $8 billion in 2010. The US and the European Union bans on oil imports are estimated to cost Syria about $400 million a month.
Syrian officials haven’t said how much cash is left in the nation’s reserves. Yet despite the economic pressure, the conflict grinds on.
“Many months in, the refrain was that diplomatic pressure and economic sanctions essentially would suffice; all eyes were on Syria’s foreign currency reserves, their depletion somehow being seen as the tipping point in the regime’s fate,” the International Crisis Group report said. “Over time, the calculus changed.”