Damascus (AFP)

The Syrian Central Bank officially revised down the value of the local currency against the dollar on Wednesday after weeks of sharp depreciation on the black market and against the backdrop of new US sanctions to come into effect on Wednesday.

The official exchange rate, applied since March, has increased from 704 pounds for one dollar to "1,256 Syrian pounds for one dollar for import financing," the central bank said in a statement on social media.

With regard to "transfers from abroad", the official rate has increased to 1,250 pounds per dollar, it is added.

A dollar was worth 47 pounds before the war started in 2011.

According to the Central Bank, the amendment aims to "reach an equilibrium price" in order to "close the gap between the market price and the price (applied to) remittances (...)".

She explains this decision by a "provisional" context of "unilateral tightening of coercive economic measures against the Syrian people through what is called the + Caesar law + in addition to the persistent economic crisis in Lebanon".

The Syrian pound is experiencing its worst drop since the start of the conflict, having propelled prices to historic highs and leading to unprecedented protests last week in regions controlled by Damascus.

In early June, the greenback briefly crossed the threshold of 3,000 Syrian pounds, before falling back somewhat.

On Wednesday, the rate on the black market varied between 2,600 and 2,800 pounds per dollar, traders told AFP.

The official devaluation comes as the United States is preparing to apply this week the Caesar law which includes a freeze on aid for the reconstruction of the country and measures against foreign entities collaborating with the Syrian government.

According to Zaki Mehchy, a researcher at Chatham House, the Central Bank seeks to "encourage people to use the official channels instead of the black market".

But the pound will probably continue to unscrew, with ad hoc assessments, he adds.

Devastated by nine years of war, the Syrian economy is also weakened by the current financial crisis in Lebanon, which has long allowed dollars to flow into government areas, subject to international sanctions.

Analysts say the plunge in the Syrian pound is due to concern over the new US sanctions and the unexpected disgrace of the country's wealthiest businessman, Rami Makhlouf, cousin of the Syrian president.

Damascus blames the country's economic and monetary crisis for international sanctions.

Last week, President Bashar al-Assad sacked his Prime Minister, Imad Khamis, after criticism of the government over the management of the crisis.

© 2020 AFP