Enab Baladi – Jana al-Issa

The value of the Syrian pound has seen a noticeable improvement against foreign currencies since the beginning of the current March, after months of relative stability at around 14,500 Syrian pounds to the dollar.

According to the S-P Today website, which specializes in monitoring foreign currency and gold rates, the dollar selling price was recorded at 14,000 Syrian pounds and the buying price at 13,850 Syrian pounds at the time of preparing this report.

The European euro selling price reached 15,253 Syrian pounds, with a buying price of 15,084 Syrian pounds.

The improvement of the pound coincided with the advent of Ramadan, a time when the value of remittances to Syrians from their relatives abroad usually doubles, amidst talks of government intervention to control the price, without details of this intervention.

Central Bank adopts the improvement

The Central Bank of Syria (CBS) unofficially attributed the recent improvement in the pound’s value to policies it has been following for months.

A source in the Central Bank, who did not want to be named, said in a press statement to the local Al-Watan newspaper on March 5, that the measures and decisions issued by the Central Bank in recent months, which aided in facilitating the export of Syrian products, in addition to a cooperation agreement with the private sector, have contributed significantly to controlling the “bleeding” of foreign currencies leakage abroad, which led to an improvement in the exchange rate of the pound.

The source pointed to the continued support of the national currency through several measures (not specified) to reduce market prices, he said.

Economist at the Omran Center for Strategic Studies Manaf Quman told Enab Baladi how the Central Bank’s policies could be considered as contributing to the pound’s improvement when it began a gradual devaluation program in 2023 from around 4,500, raising the exchange rate under the pretext of bridging the gap with the black market.

The Central Bank’s policies of import rationalization through the import platform complicated the import process and increased monopolies, leading to market shortages and a spike in general prices, said Quman, in conjunction with other policies.

Ramadan remittances, Temporary improvement

Many experts disagree that the Central Bank’s policies are behind the improvement in the pound’s value, attributing this improvement to the doubling of remittances with the onset of Ramadan.

Dr. Firas Shaabo, a specialist in finance and banking, told Enab Baladi that the value of the Syrian pound against foreign currencies has been “security-wise stable, not economically” for months, with prices rising significantly while the exchange rate does not, indicating that the exchange rate is not economically controlled.

Shaabo mentioned that the timing coincides with the doubling of remittances, thus a large amount of dollars enters the country, causing a slight improvement in the exchange rate.

Shaabo clarified that this improvement is temporary, as the situation is controlled security-wise, not economically, predicting that economic rules will prevail, and there will be a malfunction in the pound’s value, which will lead to spikes in its value against the dollar.

Quman told Enab Baladi that he does not agree with the description of the pound’s value improvement, explaining that even if the pound’s value increased by about 100 or 200 pounds in a short period, it cannot be considered an improvement in the foreseeable future.

Quman emphasized that the increase in the pound’s value is due to the amount of external remittances in US dollars because of Ramadan, indicating that remittances increased by 50% since the beginning of the current month.

There is a lack of official numbers and statements that determine the value of remittances to the regime-held areas, while estimates indicate that the value of these remittances during Ramadan alone reach around 660 million US dollars.

In March 2022, the deputy dean of the Faculty of Economics, Ali Kanaan, suggested that the value of remittances through officially licensed exchange companies during Ramadan alone is expected to be about 420 million US dollars, explaining that the value of official remittances outside the month of Ramadan is estimated at about seven million dollars daily.

Meanwhile, it is expected that through informal channels (black market), financial remittances with an average value of 240 million dollars will be received during Ramadan only, as the value of remittances that arrive through informal channels is estimated at about three to five million dollars daily outside Ramadan, according to Kanaan.

Syrians abroad resort to supporting their relatives in Syria financially through remittances, as most residents in various provinces depend on these financial remittances, especially after the severe decline in the purchasing value of the Syrian pound and the significant rise in prices.

“Dollar collection season”

Syrian researcher Eyad al-Jaafari considered in an opinion article published on the website of the Lebanese Al-Modon newspaper, that this month is an opportunity for currency traders who will exchange the liquidity of the pound available in their hands for cheap dollars, and then, sell them to the needy later at higher prices, after the end of this season, after Eid al-Fitr when the dollar soars again, as it happens every year, before, during, and after Ramadan.

The researcher pointed out that it could have been said that the scene on the Syrian currency market was natural, with the increased supply of dollars by virtue of its increased imports, thus reducing its exchange rate, and increased demand for the Syrian pound to secure the needed liquidity for spending on Ramadan requirements, thus improving its exchange rate – a natural movement that aligns with the known mechanisms of supply and demand in any market.

However, the detachment of the reality of commodity prices from the exchange rate, and the resulting decrease in the purchasing power of the pound at the same time, when currency monitoring platforms indicate an improvement in its exchange rate, is what makes the scene “unnatural,” which makes reading the exchange rate in the black market as an artificial and manipulated indicator, not reflecting the true value of the pound.

Zero reflection in the markets

The improvement in the value of the Syrian pound did not reflect on the markets, indicating that citizens are not positively affected by this improvement.

A professor of economics at Damascus University, Shafiq Arbash, attributed the reason for the prices not being affected by the pound’s improvement to recent government policies, especially in the field of raising energy carriers’ prices, which have followed a consecutive increase over short time periods, prompting merchants to adopt a hedging policy against these increases, he said.

Professor of Economics at Aleppo University, Hasan Hazouri, compared prices in Syria to a “non-return valve,” as they rise with any increase in the dollar exchange rate or global prices, but do not fall when the opposite happens.