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Syria switches currency peg from dollar to SDR
Source: BI-ME and agencies , Author: BI-ME staff
Posted: Tue June 5, 2007 12:00 am

SYRIA. Syria will link the Pound to the International Monetary Fund''s special drawing rights (SDR) in July, abandoning its peg to the US Dollar, the central bank governor said.

"We will do it now in July," Governor of the Central of Syria Adeeb Mayaleh told reporters in Abu Dhabi. Mayaleh said in October that the change would take place in the first half of 2007, but "we needed some time so we slightly delayed it".

Effective from 1 January 2006, the IMF set weightings for the SDR, its unit of account, at 44% of the US Dollar, 34% Ruro, and 11% each of Yen and the British Pound Sterling.

"[The change] gives more stability to the Syrian Pound and it mitigates the risks of fluctuations of currencies like the Euro and US Dollar," Mayaleh said.

Asked about the weighting of the US Dollar in the Syrian currency reserves, he said: "There will be no change for the moment and we will keep it at 50:50 (US Dollar to Euro), but we might change it later on depending on any new development."

Syria has been reducing its US Dollar holdings since 2005, when reserves were entirely in US Dollars, Mayaleh has said. Syria was already pricing oil ــ a main revenue source ــ partly in Euros, he had said.

Central banks in the Middle East have been reducing their exposure to the dollar, which hit a record low against the euro in April.

Kuwait, the Middle East''s thirdـlargest oil producer, dropped its peg to the US dollar last month to combat imported inflation.

The United Arab Emirates aims to hold 10% of its reserves in Euros by the end of the third quarter of 2007, up from 3%, central bank governor Nasser AlـSuweidi said in January.

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