Syrian currency woes: regime pledges to reverse pound’s fall as economy deteriorates

The exchange rate has partly recovered since anti-Assad demonstrations broke out in Suweida, but a businessman says the improvement is unsustainable

(FILES) In this file photo taken on October 2, 2018, Syria's then-Water Resources Minister Hussein Arnous attends the Trade Expo for Rebuilding Syria, in the capital Damascus. Syria President Bashar al-Assad on June 11, 2020 sacked Prime Minister Imad Khamis, replacing him by Water Resources Minister Hussein Arnous for an interim period leading to legislative polls set for next month, as the country grapples with a stinging economic crisis. / AFP / LOUAI BESHARA
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A new Syrian prime minister appointed by Bashar Al Assad has pledged to reverse “unjustified” fall in the Syrian pound which is hitting livelihoods in regime areas.

The announcement by Hussein Arnous comes ahead of toughened US penalties against the regime, in the Caesar Act, which are due to come into effect this week.

A sharp weakening in the Syrian pound partly contributed to demonstrations denouncing five decades of Assad family rule, breaking out last Sunday in the mostly Druze province of Suweida, and which the authorities consider to be loyalist.

The official news agency said Mr Arnous pledged after a cabinet meeting on Saturday “to take all necessary measures to restore the exchange rate”, describing sharp fall this month as “unjustified volatility”.

A handout picture released by the local news site Suwayda 24 shows Syrians chanting anti-government slogans as they protest the country's deteriorating economic conditions and corruption, in the southern city of Suwaida on June 9, 2020.  - == RESTRICTED TO EDITORIAL USE - MANDATORY CREDIT "AFP PHOTO / HO / SUWAIDA24" - NO MARKETING NO ADVERTISING CAMPAIGNS - DISTRIBUTED AS A SERVICE TO CLIENTS ==
An anti-Assad regime demonstration under way in Suweida, southern Syria, in early June 2020. AFP

The pound is trading at 2,275 pounds to the US dollar, data by currency monitor The Syrian Pound Today showed.

The current rate is a sharp improvement from the 3,000 pounds to the dollar when the demonstrations started in Suweida a week ago.

The authorities will “continue to pressure the market and boost supervision of money exchange companies,” the agency said.

It said the government will support steps by the central bank to encourage people to use official channels to send hard currency into regime areas, under which dollars would have to be converted to Syrian pounds at a rate determined by the authorities, not the market.

A Syrian businessman attributed the improvement in the exchange rate to business people in Damascus pumping dollars in the market upon the request of the regime.

He said restrictions have been also eased on receiving remittances after people were discouraged from transferring dollars in regime areas.

The official exchange rate for remittances has been altered to largely resemble the market rate, he said.

"These steps do not improve the economic fundamentals and do not mean that the improvement in the exchange rate will be sustained," the businessman told The National from Dubai.

Regional bankers say sharp fall in the value of the pound earlier this month are related to the drying up of the dollar supply from Lebanon after a financial crisis that hit Lebanon in October-November last year deepened.

They say a tougher US stance against the regime also dampened expectations of any international reconstruction assistance. The pound was trading at about 50 to the dollar on the eve of the Syrian revolt in March 2011.

The Caesar Act is due to come into effect on Wednesday. It specifically targets individuals and companies whose ties with the Syrian regime are deemed perpetuating its human rights violations.

Images taken by a photographer, who defected from the Assad military, and is codenamed Caesar, prompted the legislation.

International human rights organisations say the photos, which were made public in 2014, constitute evidence of the killing of thousands of political prisoners in the regime’s jails.

The new Syrian prime minister, a Sunni, was appointed on Thursday. His position is powerless, with all real power held by Mr Assad and an inner circle who belong to Mr Assad’s Alawite sect.

Another demonstration demanding the removal of Mr Assad took place in Suweida on Saturday, similar to the previous protests, was marked by the participation of women.

Regime forces have largely stayed away from the demonstrators in Suweida.

The mostly hands-off approach so far by the regime towards Suweida is partly due to the nature of the heavily armed society in the province and a balance of power between Hezbollah and Russia, who back different local actors.