The Syrian pound is at a historic crossroad. In truth it is not a crossroad, but only one road and obligatory direction… depreciation. But the question which occupies everyone’s mind today is, “What is the speed of the depreciation? And are we witnessing a complete collapse of the Syrian pound during a short period of time, or is the regime’s Central Bank still able to reduce the speed of the collapse?”
But facts indicate that the Central Bank’s breaks are ineffective at stopping the deterioration of the pound.
There is a covert move the regime seeks to achieve by compensating the Central Bank’s interventions, and it is the return to the idea of production and export as a way to gain access to hard currency to offset the bleeding in the central bank’s stocks. This way the Central Bank will return to playing its role of pumping money into the exchange markets, and controlling the exchange rate once more. The regime aims to change the Central Bank’s breaks and not adopt a new economic or monetary policy.
The regime’s faith in the Central Bank’s ability to halt the collapse of the pound, based on the success the Central Bank has achieved in the past five years, appears real as the regime is not attempting to seek out other alternatives. But to what degree is this correct, and can the Central Bank control the initiative once more in the event new stocks were made available for it?
Of course the regime does not believe in economy and productivity to defend the pound, because it was the first to start destroying the economic infrastructure of the country when it raised the slogan of burning everything for Assad. And it is still insistent on continuing to burn, and it is turning to the Central Bank to perform this role. From its side, the Central Bank is waiting for the new stocks that will enter its vaults to in order to recommence its role. By the time that comes, the dollar may have surpassed 1,000 pounds. It is the logic of production which the regime has started to think with, as it will need at least a full year before it reaps the results.
The question is: what if this productivity is not achieved? What will the situation of the pound be after a year? We don’t want to speculate on this matter, but economic logic dictates that its collapse will be resounding this time. We would not be surprised if the dollar reaches 5,000 pounds – and suddenly.
This article was edited by The Syrian Observer. Responsibility for the information and views set out in this article lies entirely with the author.