Syrian pound gains as confidence rises after army gains near Damascus

The Syrian pound recovered in the last 10 days buoyed by improved sentiment after the army`s sweeping gains in securing a main rebel enclave near the capital Damascus, investment managers and dealers said on Wednesday.

Traders said the pounded was trading at 425 to the dollar on Tuesday, its strongest level since November when Russian-backed Syrian government forces and its allies regained the city of Deir Zor on the west bank of the Euphrates River from Islamic State militants.

It is the largest and most important city in eastern Syria and a centre of the county`s oil production.

The pound accelerated its gains in the last two days, trading at 446 on Monday and opening at 410 on Tuesday before retreating back to 425 to the dollar from 470 nearly 10 days ago, one dealer said.

Russian-backed government forces have recovered nearly all of the eastern suburbs of Damascus in a ferocious assault that began in February.

It marks President Bashar al Assad`s most significant victory over the rebellion against his authoritarian rule since rebels were driven from eastern Aleppo in 2016.

The pound has been fluctuating in the last five to six months around 475 to the dollar, dealers said.

The pound`s value, however, still remains far below the level of 47 to the dollar before protests against Assad`s rule erupted in March 2011.

In the last two and a half years, since Moscow alongside Iranian-backed militias turned the tide in favour of Assad by pushing rebels from large swathes of territory in western and eastern Syria, the local currency has improved, dealers said.

"People feel more reassured ... there is more activity and people have begun to think the war is nearing its end or ... that the country`s outlook in the future (is) better," one investment manager in Damascus said by telephone.

More people in government-controlled areas are hopeful the economy will improve, another dealer said, adding that people were less inclined to hoard dollars as a safe haven.

This has increased the demand for the local currency, said an exchange dealer in the northern city of Aleppo, who also requested anonymity.

"Everyone who used to use the dollar as a safe haven is now less afraid so the fear factor is no longer there and so the demand on the dollar has fallen," he said.

Ravaged by war, many Syrians have been for years hoarding dollars for day-to-day transactions and business dealings.

The currency has avoided a complete freefall despite widespread devastation caused by the conflict and Western sanctions on Syria, bankers said, citing large infusions of aid from the country’s main regional ally, Iran, in recent years alongside Russian support.

A mandatory move by the Central Bank of Syria to steeply raise the capital of nearly 20 main licensed exchange dealers by the end of last month has also helped the local currency, with companies forced to exchange dollars for pounds to comply with the new capital requirements, dealers said.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)