AMMAN (Reuters) – Syria’s currency has fallen around 13 percent in the last 24 hours on the black market in Damascus as consumers and companies sought to hoard dollars, interpreting recent statements from the United States as signals of possible military intervention.
Dealers speaking on the phone from the Syrian capital said it cost as much as 100 Syrian pounds to buy a dollar on the street compared to around 47 a year ago, when the uprising against President Bashar al-Assad began.
It has since stabilized at around 92 pounds to the dollar compared to 80 on Tuesday.
“People are scared and this is driving demand for dollars in a market where demand far exceeds supply,” said one leading Damascus based licensed exchange dealer.
Dealers said Syrians had scrambled for dollars after influential U.S. Senator John McCain urged US air strikes on Assad’s forces. A U.S. House committee has also called for Assad to be referred to a war crimes tribunal.
Although President Barack Obama squarely opposed McCain’s calls, bankers and dealers who Reuters spoke to said clients’ fears of military action by the United States had risen.
“The market is becoming very sensitive to any signs of growing foreign intervention in Syria. I believe this is driving the latest wave of demand for dollars,” said one banker in a majority Gulf-owned bank who requested anonymity.
International pressure is growing on Assad to end a nearly year-long crackdown on protesters. The United Nations says Syrian security forces have killed well over 7,500 people.
The central bank’s failure to intervene in the market since has added pressure on the currency, dealers said.
Bankers say the bank is reluctant to continue the kind of large scale intervention it is believed to have carried during the first eight months of the unrest, as it seeks to reduce depletion of its foreign reserves, which were estimated at $17 billion before the unrest broke
In a move to ease speculation on the currency, the authorities have however sought to narrow the differential between the black market and official rates.
They now allow licensed dealers to offer the currency at ranges closer to black market levels than the official rate that stands at 59.5 pounds to the dollar, compared to 54 in December.
Several exchange dealers said their offers to sell dollars at a higher indicative price of 79.5 pounds were approved by monetary authorities on Wednesday. On Tuesday they were offering to sell dollars for around 70 pounds.
“The central bank appears resigned to the growing pressures facing the pound and by allowing exchange dealers to offer a more realistic price they hope to curb excessive speculation they say is behind the weakening of the currency,” said one Damascus based exchange dealer.