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Syria bans imports to save foreign currency

Sep 24, 2011, 2:45 p.m.
Aisha Gaddafi, daughter of Libya's leader Muammar Gaddafi, greets her father's supporters at the heavily fortified Bab al-Aziziya compound in Tripoli in this April 14, 2011 file photograph. REUTERS/Zohra Bensemra/Files

Along with hurting industrial output, the unrest has dealt a big blow to a tourism industry that used to account for 12 percent of foreign revenue, economists and businesspeople said.

DOLLARS HOARDED

Some businesspeople that, even before the ban, merchants had already reduced letters of credit for imports as demand fell. They said traders and even government agencies were hoarding foreign currency as worries rose that new measures to cushion the economy from sanctions could hit the Syrian pound.

"This move will only worsen the situation and add to the uncertainty," said another businessman in the Halabouni district in the capital.

"(Investors and traders) ... are holding tight and not buying any goods ... but (also) not panicking so far."

Economists and bankers say Syria's foreign reserves have been falling as the central bank sells hard currency to try to stop the Syrian pound falling on the black market.

The official rate is 47.4 Syrian pounds to the dollar, but on the black market a dollar costs 51 pounds or more.

The International Monetary Fund predicted this week that Syria's economy would contract 2 percent this year, overturning a forecast of 3 percent growth issued in April. (Additional reporting by Justyna Pawlak in Brussels; Editing by Kevin Liffey)

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