Syria Will End Dollar Peg, Moves Reserves to Euros
July 11, 2006 (Bloomberg)

Syria, under fire from the U.S. for the alleged support of terrorism, plans to end its currency peg to the dollar by year-end to reflect closer trade ties with Europe, central bank Governor Adib Mayaleh said.

The Central Bank of Syria has already converted half its foreign-exchange reserves to euros, Mayaleh said in a telephone interview from Damascus, without being more specific. Syria's reserves, including gold, totaled $4.1 billion at the end of 2005, according to the U.S. Central Intelligence Agency.

"We want to have a currency peg that will reflect our external trade,'' Mayaleh said yesterday. The European Union is Syria's largest trading partner, taking half of its exports, he said.

AntiSpin: The latest episode of Stagflation Godzilla Returns! refers to the the Oil Destroyer. It's a take-off on the Oxygen Destroyer from the original Godzilla Returns movie. The Oil Destroyer is OPEC Oil Embargo V2.0, new and improved. Rather than simply selling oil at high prices through intermediary countries but continuing to recycle dollars back into the US banking system, as Saul Eslake, Chief Economist of the Australia & New Zealand Banking Group, Ltd warned June 22 in his report to the International Conference of Commercial Bank Economists The Emergence of Oil Producers as Net International Creditors: Possible Implications for the Global Financial System: oil producing countries that are enemies of the US have developed strong trade ties with Asia and Europe and are no longer reliant on the US for export revenue. They can cut off the oil AND stop lending the US the money needed to buy it without suffering much from the revenue loss. This could make the 1970s energy crisis look like a cocktail party: $200 oil with high inflation and interest rates.

Syria switching reserves to euros is a first step in the process. Not coincidentally, gold, silver and platinum all rallied on the news.