Syria’s Central Bank Scrambles to Stop Currency Collapse

Governor: Falling Exchange Rate 'Not At All Justified'

by Jason Ditz, May 12, 2016

With a large chunk of the country under the control of various rebel factions, it is perhaps unsurprising that the Syrian Pound is not what it once was. The Damascus Central Bank, however, is scrambling to try to prop up the currency in recent days, amid another precipitous fall.

Central Bank Governor Adeeb Mayaleh says that the bank has injected another $10 million US into the economy this week to try to shore up the exchange rate, warning that the current rate of around 635 pounds to the dollar is “not at all justified.”

In practice, of course, a lot of the currency fall isn’t related to supply, but to the likelihood of the Assad government collapsing, rendering the currency effectively worthless. Across the country, a lot of people are using other currencies, in particular the US dollar, instead.

Mayaleh warned that the exchange rate would take a “big drop” and that speculators would suffer big losses. While that’s likely the case, if the Assad government does in fact survive, the soaring deficits the government is running during the war likely means the pound will never recover its pre-war levels.

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