Syrian lira plummets as Caesar Act takes force

Syria's central bank officially devalued the Syrian lira on Wednesday as new US sanctions took effect, following weeks of sharp depreciation in the currency's value on the black market.

An alleged government document shared on social media appeared to show the war-ravaged country's central bank increasing the official dollar exchange rate from 704 to 1,256 Syrian liras.

The development was later confirmed by the regime's official social media pages.

Earlier this month, Syria's currency plunged to a record low on the black market - around 3,000 liras to the dollar, sparking rare protests in the mainly Druze city of Suweidah, calling for the overthrow of President Bashar al-Assad.

Later, following an apparent injection of dollars, it rebounded slightly. Yet on Wednesday traders told AFP that the rate on the parallel market stood at around 2,600 to 2,800 liras to the dollar.

The sharp fall comes as the US on Wednesday implemented new sanctions under the Caesar Act, passed in the US Senate in 2019.

The act will target businesses, individuals and entities who have knowingly provided financial, material, or technological support to the Assad regime, or contributed to Syria's reconstruction. It contains far-reaching sanctions, including travel bans, and asset confiscation.

Read more: What is the Caesar Act and how will new US sanctions impact Syria?

Zaki Mehchy, a senior consulting fellow at the London-based Chatham House think tank told AFP  that the central bank was now trying to minimise the gap between the official and black market rates, to encourage Syrians to use the former channel.

Syria's economy has been brought to its knees after nine years of war. It also suffers from the hard, knock-on effects of a financial crisis in neighbouring Lebanon that has obstructed the flow of dollars into areas under regime control.

According to the World Food Programme, 7.9 million people inside Syria are unable to meet their food needs and a further 1.9 million people are at risk of food insecurity.

Last month, the UN agency said the price of the national average food basket in Syria had risen by 111 percent year-on-year, reaching the highest levels since the start of the war, BBC report.

The Syrian regime lays the blame for the country’s economic crisis on international sanctions. Only last week, Assad sacked his prime minister of four years after criticism of the regime's handling of the crisis.

Before the conflict, the exchange rate stood at 47 Syrian pounds to the dollar.  

The first wave of sanctions will be imposed on 17 June, with three other stages expected to follow by the end of August.

The Assad regime has condemned the Caesar Act, saying the United States will "bear main responsibility for the suffering of the Syrian people".

The US insists that the sanctions only target regime cronies and not the Syrian people.

Agencies contributed to this report.

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