07/16/2013, 00.00
SYRIA
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Syrian rebels pay in dollars, local pound collapses

Syria's inflation rate rises following the flow of foreign currencies from Gulf States to anti-Assad rebels. Pound goes from 47 to 347 against the US dollar with the middle classes paying a heavy price.

Aleppo (AsiaNews/Agencies) - The Syrian pound has collapsed after two years of civil war. The growing presence of US dollars and euros is lowering the value of the local currency and pushing up inflation. The rise in fuel and food prices that had already devastated the regions most affected by the fighting, but the national currency has followed suit in the past month.

"Before the uprising the currency was stable," said Hasan, a small trader. "It was 47 Syrian pounds to the dollar, and it barely went up or down. But in the past month, the Syrian currency has collapsed. When it was at its weakest a few weeks ago, we were selling 347 Syrian pounds to the dollar."

About a year ago, the intensification of fighting in and around Aleppo led the regime to cut off oil supplies to rebel-controlled areas. This resulted in a significant increase in the price of fuel, which jumped from 44 to 325 pounds per litre.

The price of food, often dependent on that of gasoline for transportation from rural to urban areas followed.

With rebels capturing oilfields in the northeast of the country, rebel-controlled areas could be resupplied. However, this meant an influx of dollars. In fact, "Whenever the rebels take control of a new area, the dollar rises against the pound," Hasan said. Yet, "the dollar goes down when the rebels bring money from outside and start spending it in Syria."

In recent days, he said he also saw an influx of people who come to change euros. However, "I think the dollars are coming from donors in the Gulf States," he explained.

With the civil war, the economy has virtually collapsed and dragged down foreign trade. People who can use dollars. The rebels rely on informal channels.

Middle class Syrians who did not exchange their savings for foreign currency before the collapse have seen them wiped out.

People with dollars have an interest in seeing it remain high, especially since it is traded on the black market at three times the official rate

The state news agency SANA reported that the government approved a bill on 10 July banning business deals in currencies other than the pound, with penalties ranging from three to ten years in prison.

When it realised that businesses were quickly taking their money out of the country through Turkish banks, it took steps to hoard Syrian pounds and toughen foreign exchange regulations.

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