Syrian pound gains as fears of U.S. military strike recede

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Syria’s currency has recovered some of the heavy losses inflicted over two years of civil war and sanctions, helped by a U.S. decision not to pursue military action against Damascus.

Traders said the pound, which traded at 47 to the dollar before protests against President Bashar al-Assad erupted in March 2011, was trading at 167 to the dollar on Tuesday, its strongest level since June - partly due to the return of some refugees with dollars to change.

That has helped make the pound worth nearly twice as much as in July when it briefly hit record lows of around 300 per dollar.

“There is less psychological pressure because the scare about a strike has gone,” said a Damascus based banker, adding that the central bank’s readiness to inject more dollars was also supporting the pound.

The pound’s value has also revived somewhat after the arrest of dozens of dealers and the closure of several exchange houses which officials blamed for its wild fluctuations, dealers said.

It sank to 235 after President Barack Obama announced that Washington wanted to strike Syrian targets in response to a deadly chemical attack but has appreciated again helped by central bank intervention in the market and, dealers say, by the return of some refugees who have bought pounds.

“A lot of people who had left were returning and there is more demand because they are bringing dollars and spending in Syrian pounds. We are feeling their presence,” said a dealer in a licensed firm located in one of the main Damascus trading areas.

Other moves such as eased restrictions on banks selling dollars was helping to bolster the pound, one banker said, adding that the central bank was meeting most of their foreign currency needs.

Dealers said the central bank was expected to announce plans in the next few days to lift a $10,000 ceiling on dollar purchases by ordinary Syrians for non-trading purposes.

“The closure of several exchange houses because of violations and the arrest of many black market speculators has helped to curb volatility and gradually stabilised the market,” said one chief dealer in a major Damascus-based exchange company.

Syria’s foreign reserves crashed by more than a third in the year to the end of 2011, figures published by the central bank showed.