Sliding Syrian pound hits new low as Lebanon crisis spills over

Lebanon, long a conduit for Syria's sanctioned economy, is rocked by its own financial crisis

FILE - In this July 24, 2019 file photo, a man stands in front of an ATM machine outside a branch of the International Bank for Trade and Finance, in Damascus, Syria. The Syrian pound has hit a record low amid the country’s grinding war and as a financial and political crisis roils neighboring Lebanon, Syria’s economic lung. The dollar was worth 920 Syrian pounds at some exchange shops on Monday, Dec. 2, 2019, in the capital, Damascus, a sharp drop from recent days. (AP Photo/Hassan Ammar, File)
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The value of the Syrian pound on the black market continued to slide hitting 1,000 to the dollar at money changers on Tuesday, marking a new record low for the nosediving currency.

The drop comes amid a spiralling liquidity crunch in neighbouring Lebanon, which has long served as a conduit for foreign currency entering the heavily sanctioned government-held areas of Syria.

One currency exchange office in the Syrian capital Damascus said he was selling dollars on the black market for 1,000 pounds for the first time on Tuesday.

A specialised website put the volatile rate at 975 pounds to the dollar – more than double the official rate of 434 Syrian pounds posted by the central bank on its website.

At the start of the war in 2011, the rate stood at around 48 pounds to the dollar.

In the Old City of Damascus, a trader who preferred not to give his name said everything from food to transport had become more expensive in recent weeks.

"Prices have doubled in the past two months," the trader said.

"Everybody prices their items according to the new dollar exchange rate" on the black market, he explained.

Syria analyst Samuel Ramani said the pound had fallen by 30 per cent since anti-government protests erupted in Lebanon on October 17.

An economic downturn has accelerated since the protests started, and a liquidity crunch has become more acute in a country that has long served as an economic and financial lifeline for dollar-starved Syrian businesses.

As Western sanctions tightened on Syria during the war, many in the country have opened businesses in neighbouring Lebanon, stashed their money in its banks and used the country as a conduit for imports.

But Lebanese banks started introducing controls on dollar withdrawals over the summer, straining the supply of the greenback to Syrian markets.

"Lebanese banks are significant for Syria's economy as they give Syria back door access to the US dollar," he said.

"Based on commentaries from Syrian businesspeople, it appears as if the economic crisis in Syria is even worse than that in Lebanon as a result of the protests," Mr Ramani told AFP.

In Lebanon, black market rates for their own pound have also slid from the official rate around 1,507 to the dollar. Unofficial rates have now supposed 2,000 Lebanese pounds to the dollar as more people turn to the black market with bank restrictions.

In another part of Damascus, a 30-year-old working in a shop selling computers and mobile phones imported from Lebanon said the store had to increase all prices.

"In the end, this is going to be reflected in the market and most people won't be able to pay according to the new prices," the young salesman said.

"We fear further collapse," he added.

Syria's eight-year civil war has battered the country's economy, and depleted its foreign currency reserves.

An array of international sanctions have targeted President Bashar al-Assad's regime and associated businessmen since the start of the war in 2011.

Authorities estimate that since 2011, Syria's key oil and gas sector has suffered some $74 billion in losses.

The United Nations estimates the conflict has caused some $400 billion in war-related destruction.

It has also killed 370,000 people and displaced millions more.