Syria Central Bank head says will defend pound

Syria Central Bank head says will defend pound

Syria's central bank will intervene to prop up its currency - which has plunged under the mounting pressure of sanctions and violence - and has the reserves to back that strategy, Kuwaiti state news agency KUNA cited governor Adib Mayaleh as saying on Monday.

February 6, 2012 3:00 by Reuters

Mayaleh said the black market exchange rate, which last month hit a record low of about 70 to the dollar, reflected attempts to destabilise Syria, where President Bashar al-Assad is trying to crush an 11-month-old uprising against his rule, the agency reported.

“The exchange rate in the parallel market is fictional, and its goal is to provoke fear and panic among citizens,” KUNA quoted him as saying, adding that the bank would be intervening in that market within one week.

“The bank’s foreign currency reserves are good, sound. The exchange rate will return to normal after positive intervention and injecting forex to make up for shortfalls…to allow banks to fund imports at normal prices.”

He did not elaborate on the level of reserves.

Black market currency traders said last month the fall in the pound – which is quoted officially at 58 to the dollar – was beginning to be reflected in the prices of commodities in Syria.

Syria kept the official exchange rate close to 50 to the dollar for the first several months of the uprising, which now features an armed insurgency in several regions of the country.

The Financial Times last month said Mayaleh had plans to allow the currency to depreciate more gradually and give banks some latitude in the rate they use for forex transactions, but would still maintain controls on the rate for imports of staple goods and personal use. (Writing by Joseph Logan) *image from bloomberg.com