A person holds a handful of Syrian Pounds, in Damascus, Syria. Photo: AFP.
The Syrian pound has surged in the black market, reaching about 7,600 Pounds per USD, nearly half the exchange rate from December, raising concerns about its “illusory” nature and its impact on Syrians’ savings. This rapid currency deflation comes amid continuous warnings, with economists pointing out that the Syrian pound’s increase in price is not correlated to fundamental economic factors such as a boost in industry or exports.
The Central Bank of Syria continues to set official rates about 40% higher than market rates, a departure from the previous government of al-Assad which set the rates at 10% lower than market rates. Traders told Al-Akhbar that, despite the rise in the exchange rate, the prices of goods have not decreased; rather, they have increased proportionally, with families now needing $450 a month, compared to the previous $300, to meet their basic needs. They also noted that “volatility in the exchange rate led many to use the pound as a base currency before converting to dollars, resulting in higher prices.”
The rise in the pound’s value is primarily attributed to the Central Bank’s policies, including restricting the movement of the currency and limiting dollar purchases, which created an environment for traders to “buy dollars at very low prices,” as explained by the traders. Additionally, the government’s actions, such as laying off about 40% of public employees and delaying salary payments, have worsened liquidity and contributed to the scarcity of the pound. The high demand for the pound, particularly from the private sector to pay salaries, led to an increase in its price. These actions have created an “illusory” rise in the pound’s value, which may be temporary and could result in a collapse once the underlying economic issues are addressed.
In an effort to alleviate the crisis, the Oil Ministry issued a directive allowing fuel stations to accept payments in dollars, which could slightly reduce the cost of goods by lowering transportation and electricity generation expenses. However, this measure seems minor compared to the larger liquidity crisis facing Syrians, as many have lost their only sources of income due to layoffs. The economic strain continues despite remittances sent by Syrians abroad, which end up in traders’ pockets due to forced foreign currency purchases at inflated exchange rates.
The future of the Syrian pound remains uncertain. Economists warn that the current rise may be “unsustainable,” with the bubble likely to burst as the government struggles to secure essential goods. This could result in a significant drop in the pound’s value and new opportunities for traders to profit, as predicted by sources speaking to Al-Akhbar.
(Al-Akhbar) by Amjad Haddad
Translation by Al-Akhbar English, with additional editing by Orinoco Tribune
OT/DZ/SC
