The introduction of a new 5,000 Syrian pound banknote has sent prices soaring and caused the currency to drop against the US dollar.
The first effect was the deterioration of the pound’s exchange rate, reaching its lowest value in history; on Sunday, the Syrian pound reached 3,200 pounds per dollar.
On Jan. 24, 2021, the Central Bank launched the new banknote, at which time the exchange rate was 2,910 pounds per dollar, rising to 3,000 pounds within two weeks.
After the currency was introduced, economists and analysts, most notably the former Minister of Economy Lamia Assi, feared that the introduction of the currency would lead to an increase in the money supply in the market, which would lead to a decrease in the exchange rate.
As for the second effect of the new banknote’s introduction, the prices of basic materials have risen dramatically over the past few days, according to the pro-regime newspaper, Al-Watan.
The newspaper stated, quoting economics professor at Damascus University Shafiq Arbash, that “prices have increased between 25 and 30 percent.”
The newspaper emphasized that “prices are rising without any account or control that violators are afraid of.”
The Secretary of the Federation of Syrian Chambers of Commerce, Muhammad al-Hallaq, considered the price soaring a result of the high exchange rate, and not the introduction of the new cash category.
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.