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Syrian Pound recovers as regime tightens capital controls

The Syrian pound on Saturday has kept its rebounding from an all-time low struck during the last two months after the regime tightened controls on bank withdrawals and internal transfers and restricted movement of cash around the country to stop dollar hoarding.

The pound was trading around 3,200 to the U.S. dollar on Saturday, its strongest level for two months. It rose 16%, reversing losses that sent the currency to an all time low of 4,000 earlier in March.

The pound’s surge began two weeks ago after the Central Bank of Syria told banks last week to cap withdrawals at 2 million pounds ($572) from an earlier limit of 15 million pounds, according to Reuters.

The Central Bank also acted to curb movement of cash within provinces to up to 5 million pounds and imposed a ceiling of up to one million pounds on transfers within government-held areas to reduce the demand for dollars, Bankers and business people told Reuters.

The currency’s fall has driven up inflation and aggravated hardship as Syrians struggle to afford food, power and other basics.

The pound had traded at 47 to the dollar before protests against Syrian President Bashar al Assad’s rule erupted in March 2011.

Businessmen and bankers said the new restrictions, which also included a security crackdown on exchange dealers blamed for the currency’s fall, were poorly-planned and would backfire.

“You cannot keep stopping withdrawals for a longer period - in the end how can the economy function if you cannot withdraw money?” said one prominent trader who requested anonymity.

Bankers said the central bank, which has largely abandoned efforts to support the currency, has also cut non-essential imports in the last two months to preserve remaining foreign currency. (Zaman Al Wasl, Reuters)

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