Syria Bans Use of Foreign Currencies for Business Deals

Syria Bans Use of Foreign Currencies for Business Deals

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Source: The New York Times – by Anne Barnard (Syria Bans Use of Foreign Currencies for Business Deals)

President [Psychopath] Bashar al-Assad of Syria on Sunday banned the use of foreign currencies in business transactions, part of the government’s effort to prop up the Syrian pound, which has plummeted to 200 pounds to the dollar from 47 to the dollar in March 2011.

SANA, the government-run news agency, said that people offering goods and services for foreign currencies without the government’s approval could be fined and sentenced to at least six months in jail. In cases involving deals valued at more than $5,000, the punishment could be up to 10 years of hard labor.

Syrians have grown increasingly desperate to move their money to foreign currencies as the civil war, now in its third year, ravages the economy. Currency exchange shops in central Damascus are often packed. Real estate and manufacturing deals are increasingly conducted in dollars. Even taxi drivers and others working in small, informal businesses often demand to be paid in foreign currencies.

Last month, the Central Bank was able to reverse a deeper plunge in the value of the pound, which briefly traded at more than 300 to the dollar, by selling off dollars at a deep discount to banks, said Steve H. Hanke, a professor of applied economics at Johns Hopkins University who studies troubled currencies. The banks then sold the dollars to the public for a modest profit.

Smaller currency traders in Damascus said they were under pressure to follow the banks’ lead, but many refused to sell dollars so cheaply. Mr. Hanke said it was unclear whether the government could sustain such interventions as a long-term strategy. Still, the government’s move had enough impact on the market that the informal and official dollar rates converged, he said.

The government has increased salaries by more than 40 percent during the crisis, but since wages are demarcated in pounds, the raises have not offset the loss in buying power.

Syrian officials and government consultants have said that the country is handling all new import deals in the currencies of China, Iran and Russia, countries friendly to the government, and that those countries have provided credit lines to help the government pay salaries and import food, fuel and other necessities.

Businesspeople and currency traders say the government has gradually restricted business dealings during the crisis, rolling back some of the economic liberalization measures carried out in the early years of Mr. Assad’s tenure with policies like forbidding the pricing of goods in dollars. Those regulations were widely ignored, and the new decree tightens the rules and increases penalties.

On the diplomatic front, Iran’s new president, Hassan Rouhani, said Sunday that his country’s strong support for Mr. Assad would remain unchanged, SANA reported.

“No force in the world can shake the solid, strategic and historic relations that bind the two countries in friendship,” Mr. Rouhani told Syria’s prime minister, Wael al-Halqi, who was in Tehran for the Iranian president’s inauguration.

Syria Bans Use of Foreign Currencies for Business Deals


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