The Central Bank of Syria, under the regime, persists in its policy of gradual SYP devaluation against the US dollar and other foreign currencies. This has resulted in a depreciation of over 315 percent since the beginning of the year. This approach aims to bridge the gap between the official exchange rate and the black market rate, given the backdrop of a struggling economy, a severe economic crisis, and unprecedented inflation rates.
On Monday morning, the Central Bank of Syria announced an increase in the exchange rate of the Syrian pound against the US dollar for transfers and exchanges. The new rate is 12,500 pounds, up from 11,500 pounds set at the beginning of October. The euro exchange rate also rose to 13,198 pounds from 12,157 pounds.
This announcement primarily pertains to cash disbursements, foreign commercial remittances, and inward remittances to citizens, including those from global remittance networks.
The devaluation of the Syrian pound against foreign currencies began at the start of the year when the exchange rate for the US dollar was 4,522 pounds on January 2. It had previously remained stable at 3,015 pounds for several months. Over the past period, the exchange rate was raised multiple times, eventually reaching 12,500 pounds.
With this latest adjustment, the Syrian pound’s exchange rate against the US dollar has increased by 9,485 pounds since the beginning of 2023, plummeting from 3,015 pounds to 12,500 pounds, as per data from the Central Bank of Syria. This represents a staggering 315 percent devaluation, marking a historic low for the currency.
On the black market, the US dollar exchange rate against the pound in Damascus has reached 13,850 pounds, exceeding even higher in Aleppo’s markets at 13,950 pounds. In Hasakeh’s parallel market, the dollar has been trading at 14,100 pounds.
What is the purpose of the decision?
The successive devaluations of the SYP are viewed as a form of partial currency floating, but this practice primarily applies to foreign remitances, which represent a significant source of support for the economy in areas under the regime’s control. The Central Bank is actively encouraging citizens to use official channels for transferring funds by issuing daily bulletins that account for black market fluctuations, aiming to narrow the gap and bolster the regime’s foreign exchange reserves, which have been severely affected by Western sanctions.
It’s estimated that the total daily remittances received in regions controlled by the Syrian regime amount to approximately $6 million, equivalent to an annual inflow of around two billion dollars. This is a substantial sum, as noted by the former Minister of Economy in the regime’s government, Lamia Assi.
However, while the regime aims to attract remittances from expatriates and humanitarian organizations, experts warn that if this influx of dollars isn’t accompanied by increased production, it could lead to further currency devaluation. Economists express concerns about the possibility of the regime printing more money, which would exacerbate SYP devaluation.
In the aftermath of each new bulletin from the Central Bank of Syria announcing a rise in the dollar exchange rate, markets in regime-controlled areas often experience confusion and soaring prices. Traders and retailers tend to raise prices or withhold goods, responding to a surge in demand from citizens who fear a rapid and exorbitant increase in prices in the days following such rate adjustments.
This article was translated and edited by The Syrian Observer. The Syrian Observer has not verified the content of this story. Responsibility for the information and views set out in this article lies entirely with the author.