Syria’s central bank said a $1 billion credit line from Iran will help support the pound as the currency extended its record slump after the U.S. decided last week to arm rebels fighting President Bashar al-Assad.
The central bank has set up a mechanism to use the credit to “finance a big part of the local market’s need, which will contribute to reducing the pressure” on the pound’s exchange rate, the state-run Sana news agency quoted Central Bank Governor Adib Mayaleh as saying. The report did not say when the credit line was given.
The Syrian central bank plans to sell foreign currencies to banks and exchange houses starting today to finance imports and meet citizens’ needs, Mayaleh said, according to Sana. Every Syrian citizen can buy as many as 1,000 euros ($1,333) a month, the news agency reported.
The pound has depreciated to a record this year amid the conflict, according to data compiled by Bloomberg. The currency fell 0.5 percent to 99.5295 a dollar on June 14 after President Barack Obama decided to send light weapons to the rebels.
Mayaleh called the drop “unjustified,” the state-run news agency reported. The central bank will continue to defend the exchange rate “whenever necessary,” he said.
The weakness is greater on the black market, where the rate is at about 200 to the dollar, according to a money changer in Beirut who asked not to be identified because the practice is controversial. A Facebook page that tracks the exchange rate in the unregulated market showed that the currency was trading from 200 to 225 to the dollar yesterday.
The latest weakness “took people by surprise,” said Zaid, a 27-year-old Damascus-based lawyer who declined to give his last name for fear of repercussions. “It has created panic among Syrians, whose salaries are not keeping up with the drop in the value.”
Iran is a longtime ally of the Assad dynasty, which has ruled Syria for more than four decades. Hezbollah, the Iranian-backed Lebanese militant group, is fighting with the president’s forces against rebels.