Enab Baladi – Jana al-Issa

In less than a month, the value of the Syrian pound recorded a significant decline, amid its fluctuations up and down during the last week, after it broke the barrier of 9,000 pounds to one dollar for the first time on May 10.

Within a period of about a month, the dollar recorded its highest numbers against the pound, reaching 9,150 Syrian pounds per dollar, after a downward march that the pound began on April 28, and its value at that time was about 7,925 pounds per dollar.

After the dollar remained above 9,000 SYP for several days, it returned to a slight improvement at the value of 8,400 for $1, coinciding with the Arab summit that Bashar al-Assad attended in Saudi Arabia on May 19, which is the first participation since the suspension of Syria’s membership in the Arab League in November 2011.

After the end of the summit and its repercussions, and the accompanying improvement in the value of the pound, it returned again to record a series of new declines, as the selling price of the $1 reached 8,800 pounds on May 24, and its purchase price reached 8,700 pounds.

Low remittances cause

The reasons for the depreciation of the Syrian pound since 2011 lie in the stock of foreign currencies available at the Central Bank of Syria (CBS) or available in the markets, according to what the economic researcher at the Omran Center for Strategic Studies, Manaf Quman, said, adding that there is no doubt that there are additional fixed reasons for that.

Additional reasons for the deterioration of the value of the pound, according to Quman’s interview with Enab Baladi, are the depletion of reserves and income generators, such as oil, gas, tourism, and foreign trade.

He also indicated that the value of the pound was also affected by the lack of aid from Iran and Russia, the lack of international aid that the regime is exploiting, and the decrease in the value of remittances from abroad.

During the month of Ramadan and the period of Eid al-Fitr, the value of Syrians’ remittances to their families within regime-controlled areas doubled without accurate official figures on the values of remittances.

The economist, Amer Shahda, said in an interview with the local Melody FM radio on April 30, when the dollar broke the barrier of 8,000 SYP for the first time at that time, that the reasons for the devaluation of the pound are due to the absence of monetary policy capable of absorbing the monetary mass that was offered during April (the period of Ramadan and Eid al-Fitr).

Shahda estimated the value of the remittances that came to the regime-held areas during that period at $100 million, noting that the limited supply of materials in exchange for the increased consumption resulting from the availability of the pound as a result of the remittances led to the depreciation of the pound in addition to the increase in the demand for the US dollar.

Temporary, political propaganda

During the last two weeks, there has been a slight improvement in the value of the Syrian pound on the black market, coinciding with al-Assad’s attendance at the Arab summit on May 19 and his meeting with Arab leaders for the first time since 2011.

Although the Central Bank pledged informally through local media during the current month to intervene in the markets to adjust the value of the pound, it did not record a significant improvement, on the contrary, it recorded a greater low.

Syrian researcher Iyad al-Jaafari considered in an opinion article published on the website of the Lebanese al-Modon newspaper on May 21 that although the day of the Arab summit fell on Friday, which is a holiday for money changers, and does not witness buying or selling deals, clear indications appeared to pump the dollar into the market, adding that several sources working in the market indicated that selling or buying dollars were made available on a noticeable scale that day.

Al-Jaafari said that the recent intervention of the Central Bank in the market came after less effective interventions, which it made at the beginning of the third week of May, but it did not bear fruit except in a limited and temporary manner, which prompted the Central Bank to carry out a greater intervention, which resulted in a “significant” improvement that made the price of the pound in the market by a 300 SYP difference less than the official selling price of “remittance dollar,” which is an unusual precedent, he added.

The researcher specializing in economics believes that this intervention, on the day of al-Assad’s meeting with the Arab leaders in Jeddah, came to confirm the “propaganda” promoted by the regime’s media that the Arabs’ openness to al-Assad is a political victory and the beginning of a relief for the living and economic hardships that Syrians have been experiencing for years.

Al-Jaafari considered that the intervention was temporary and for political and propaganda reasons, nothing more, to serve the “victorious” Assad to appear in a better appearance and that his government is able to control the currency exchange rate, pointing out that the source of this intervention is dollars from the “usurped” remittances of the Syrians.

No signs of permanent improvement

The exchange rate of the Syrian pound, in light of the current circumstances, is linked to several combined economic factors that lead to its depreciation, including weak production, negative GDP growth, and dependence on foreign markets.

In addition to the large deficit in the trade balance, the balance of payments, and the general budget of the state, in addition to the flight of foreign investments and the existence of a black market for foreign exchange.

Regarding the extent of the continued slight improvement in the value of the pound, which it witnessed coinciding with the Arab summit, al-Jaafari believes that the effect of the Central Bank’s intervention may last for only days before the market regains the initiative.

Keeping the Syrian pound at levels higher than what the market evaluates requires sustainable intervention, which means bleeding that the treasury of the Central Bank cannot bear, al-Jaafari concluded.

Economist Manaf Quman considered that the Central Bank of Syria’s abandonment of the fixed exchange rate policy and going to a flexible exchange rate policy and the evaluation of the pound as seen by the black market is an additional reason affecting the pound depreciation.

Quman pointed out that the market itself does not have any reassurance regarding the future value of the pound, as it is always subject to the mechanisms of supply and demand and greed.

The expert believes that resorting to the market under stable political and economic conditions in the midst of weak monetary policies is sufficient to see new price levels for the Syrian pound.

During the past years, the Syrian regime resorted to creating several figures for the exchange rate of the dollar in Syria for a number of reasons, most notably benefiting from the differences between the prices it imposes and the realistic numbers of the value of the Syrian pound against the dollar in the parallel market.

Since the beginning of this year, the Central Bank of Syria has taken a number of decisions under a common justification, which is “a step towards reducing the number of exchange rate bulletins issued by it, as part of its efforts to unify it.”

According to a report issued by the Jusoor Center for Studies in early 2021, the Syrian pound lacks the limits of resistance necessary to defend its stability, and it is difficult for it to withstand any shock, no matter how small, which confirms that it is vulnerable to rapid depreciation.

The report added that the impact of political and economic shifts in the exchange rate of the pound is often in the form of clear waves of rise, that is, a decrease in the value of the pound, which makes it difficult to determine the levels that it can achieve.