The price of the Syrian pound against the US dollar has been subject to a wave of declines, losing about six percent of its value over the last week as the exchange rate reached 525 pounds to buy and 530 to sell against the US dollar.
According to a report by the Damascus Center for Research and Studies (DCRS), which B2B Syria obtained a copy of, the reasons behind this swift decline lie in several factors:
1. Increasing indications that the United States intends to impose a new package of economic sanctions on Syria (the Caesar law) which also stipulate the imposition of sanctions on all those who participate in Syria’s reconstruction, along with the European Union imposing new sanctions on a number of companies and Syrian businessmen, which has created a state of fear and confusion in the market.
2. Increasing demand for US dollars in the local market to secure necessary funding to import some basic items such as oil products, gas and wheat.
3. Increasing preferences in the market to hold on to positions in US dollars ahead of the Chinese New Year holiday for 2019 and the need for Syrian importers to be ready to return to their operations after the market holiday ends with the beginning of the new year.
4. Increasing speculation and expectations that the Syrian pound will register more losses in the future.
5. Returning demand for gold and US dollars to hedge out of fears of a major decline occurring in the Syrian pound price which will cause the value of peoples savings in pounds to fall.
6. This is all accompanied by the market continuing to observe the recent prevailing military, security and political developments, especially in northern Syria.
In the official market, the pound’s exchange rate against the dollar has stabilized at banks and exchange companies, as the Syrian Central Bank is still continuing to set the pound’s rate against the dollar at 436 pounds to a dollar, while the price for international transfers of US dollars was is set at 434 pounds per dollar. According to the official bulletin, the Syrian pound’s rate against the dollar is 438 to buy and 435 to sell.
With regards to the pound’s rate against the euro in the parallel market, and according to what B2B Syria has observed through transactions this week, the rate of the Syrian pound has declined noticeably to reach a rate of 610 pounds at the end of last week, compared with 579 pounds recorded at the end of the previous week—a change of 5.35 percent. The pound also weakened a little against the euro in the official market, at a rate of 1.02 percent, reaching 501.42 pounds at the end of this week compared with 496.34 pounds at the end of last week.
This article was translated and edited by The Syrian Observer. Responsibility for the information and views set out in this article lies entirely with the author.