Enab Baladi – Muhammed Fansa

The Syrian pound has recorded relative stability in the exchange rate against the dollar, in conjunction with the decisions of the Central Bank of Syria (CBS) in February to adjust the price of the remittance bulletin on a daily basis to be close to the black market price although Syria was exposed to a massive earthquake during this period, whose losses were estimated at billions of dollars.

Since last February, the exchange rate of the Syrian pound has ranged between 6,850 and 7,650 against the dollar on the black market, according to the ٍSP-Today website, which is specialized in tracking foreign exchange rates, while the official exchange rate in the remittance bulletin issued by the Central Bank during the same period ranged between 6,650 and 7,300 SYP.

Owners of foreign commercial remittances and inward remittances to local persons, including remittances received through global remittance networks, benefit from the exchange rate in the remittances bulletin.

On March 17, the World Bank estimated the material losses of the earthquake that struck four Syrian governorates on February 6 at about $5.2 billion, equivalent to 4% of Syria’s GDP.

The bank expected a contraction of the real GDP of Syria by 5.5% in the current year and predicted an increase in the rate of inflation by a high rate as a result of the effects of the earthquake as well.

On March 28, the International Labor Organization (ILO) revealed that about 170,000 workers lost their jobs as a result of the earthquake in Syria, which directly affected about 154,000 families, more than 725,000 people, and about 35,000 companies ranging from start-ups to small and medium ones.

Foreign support

The economies of countries after disasters are exposed to setbacks commensurate with the scale of the disaster.

One of the consequences of the impact on the economy is the drop in the value of the affected country’s currency, while the country’s administration tries to find solutions to mitigate the negative effects, and aid from other countries helps mitigate the economic deterioration.

Turkey, which was most affected by the earthquake disaster, received international financial and in-kind assistance. On March 6, Saudi Arabia deposited five billion dollars in the Turkish Central Bank, and a few days before that, the UAE signed a comprehensive economic partnership agreement with Turkey, which aims to enhance trade and mutual investments between the two countries.

Despite the volume of this aid, the Turkish lira has been affected slightly since the earthquake, as the exchange rate of one dollar at the time was 18.82 Turkish liras to reach 19.32 liras, according to the Doviz website, which specializes in tracking the exchange rate of the Turkish lira.

Dr. Abdul Moneim al-Halabi, professor of Economics and Finance at Gaziantep University, explained to Enab Baladi that in the Syrian case, slight changes in the value of the currency, without recording a loss of 10% of its value in difficult circumstances, indicate stability.

Al-Halabi attributed the currency’s stability to the direct interventions of the Central Bank and the Emirati support in cash dollars.

Since January 24, the Central Bank has pledged to take a series of decisions to ensure the stability and realism of exchange rates, encourage production, facilitate the availability of commodities in the local market, and streamline export operations.

Among the most important decisions of the Central Bank, which were issued successively, is to reduce the number of exchange rate bulletins within the endeavor to unify them, and to raise the price of the remittances and banks bulletin and adjust it on a daily basis to be close to the black market exchange rate.

Al-Halabi indicated that the new strategy initiated by the new governor of the Central Bank, Mohammad Issam Hazima, is characterized by “openness and flexibility” in dealing with the dollar file, while many of the “pillars” of the regime are “unhappy” with these trends, and the Central Bank’s restoration of part of its normal role.

On the other hand, al-Halabi criticized the approach taken by the two former central governors, Adib Mayyala and Hazem Karfoul.

He described it as “a scourge on the pound and a drain on the state’s resources” due to their reliance on exchange companies and the allied and auxiliary black market relationships of many businessmen close to the regime.

Dr. Firas Shaabo told Enab Baladi that the stable situation of the exchange rates is represented by their slight ups and downs, and the stability is for economic or security reasons.

As for the Syrian situation, Shaabo believes that after the earthquake, money entered Syria, either officially or in the form of humanitarian aid for those affected from all countries of the world, which contributed to the pumping of a “huge amount” of dollars, especially after the Central Bank’s amendments to exchange rates and permission of the receipt of transfers at an exchange rate close to the black market rate.

After the devastating earthquake that struck four Syrian governorates on February 6, there were many sources of cash flow from foreign currencies to Syria, including remittances from expatriates to their families affected by the earthquake, relief campaigns organized to help those affected, or remittances from international organizations or from “friendly” countries to the regime.

Two cargo ships and about 240 aircraft arrived from the UAE alone, bringing the total volume of UAE aid to about ten thousand tons.

Regional influence

Since the beginning of this year, the neighboring countries of Syria have witnessed a significant decline in the value of their currencies, such as Iraq, Lebanon, and Egypt, due to several international factors, according to expert analysis.

Last March, the exchange rate of the dollar exceeded 100,000 Lebanese pounds, while the exchange rate was about 40,000 pounds at the beginning of the year.

The Iraqi dinar has recently recovered after the Central Bank’s actions, reaching 1,420 dinars per dollar after it reached, last February, about 1,700 dinars per dollar.

The exchange rate of the dollar against the Egyptian pound increased from 24 pounds per dollar to reach about 37 pounds last March.

Professor of Economics, Dr. Abdul-Moneim Al-Halabi, believes that financial policies and the expansion of credit without controls linked to the real economy have led to excessive liquidity of national currencies.

On the other hand, al-Halabi referred to the impact of the Russian war and the significant increases in energy and food bills, which in turn led to a huge increase in the demand for the dollar.

Doctor of Banking and Financial Sciences Firas Shaabo linked the economic impact in Syria, Lebanon, and Iraq with Iran to the existence of formal and informal trade routes between these countries.

The Iranian economy is suffering from a severe crisis, as the Iranian riyal lost a fifth of its value during the last two weeks of February, reaching record levels of decline, and the dollar exchange rate is currently about 42,000 Iranian riyals.

What is the fate of the Syrian pound?

Al-Halabi believes that the relative stability of the Syrian pound will continue as long as the Central Bank develops and expands the dollar trading environment.

Al-Halabi said that the upcoming positive atmosphere of the regional political situation and the Arab openness will clearly benefit the regime economically.

On the other hand, Dr. Shaabo believes that in the event of a political settlement with the Syrian regime, the first beneficiaries will be the warlords in terms of income, as normalization will contribute to the ease of movement of funds for those affiliated with the regime, while the Syrian economy will not improve.

Shaabo based his expectations on the UN estimates required to improve the Syrian economy, revitalize it, and rebuild the infrastructure, which costs about $500 billion, and it is difficult to secure it even if countries normalize the regime, as it needs an international decision.

The value of the Syrian pound recorded a decrease of 50% in 2022, as the exchange rate of the dollar at the end of the same year was about 6,500 Syrian pounds, while the exchange rate of the dollar at the beginning of 2022 was about 3,600 pounds per dollar.

The depreciation of the Syrian pound is directly reflected in the residents of the regime-controlled areas, as it is accompanied by a rise in the prices of food and basic foodstuffs, which further exacerbates the weakening of their purchasing power.