Over the past few days, the Syrian pound has witnessed an accelerated decline after a period of relative stability that lasted several months, which reflected negatively on the lives of Syrians in regime-controlled areas.
The exchange rate of the Syrian pound earlier this year was 3570 for purchase and 3605 for sale. Then, the pound began to decline slightly until it stabilized between 3850-3900.
On July 19th, the Syrian pound began to deteriorate, and the exchange rate of the Syrian pound continued to decline as well, until it recorded –during the past hours– 4460 for purchase and 4500 for sale.
External influences and Asma al-Assad
The Syrian pound’s rapid decline over the past few days, after months of relative stability, has opened the door to question the causes of this deterioration.
Economic analyst Radwan al-Debs told Syria TV: “There are two main reasons that coincided and contributed to the deterioration of the value of the Syrian pound. The first is that the Iranian credit line, which supported Assad with millions of dollars after the beginning of the current world and lasted for several months, seems to have stopped now.”
“The second factor contributing to the deterioration of the pound is the existence of a deficit in the state budget since the beginning of the year, and with the arrival of the last third of the fiscal year, the regime cannot fill this deficit. The government fund of the Central Bank has become empty, which has reflected negatively on the reality of the pound.”
For his part, the researcher in economic affairs, Younis Al-Karim, attributed the deterioration of the Syrian pound to external and internal reasons. The most prominent external factors are the rise in oil prices and global inflation, the reluctance of Assad’s allies to support him, and his failure to attract China as a new economic player in the Syrian market.
The Russian war has had repercussions on the reality of the pound. Assad’s support for the Russian invasion of Ukraine prompted the EU and the countries that stand against Moscow to tighten their economic relations with the intermediary parties dealing with the regime for fear of falling into the circle of embargoes and sanctions.
Speaking to Syria TV, Karim pointed to a reason that also contributed to the decline in the pound’s value. Asma al-Assad was trying to arrange the internal situation to acquire early recovery projects, which finally led donors to refrain from providing financial support for these projects, in light of studies they conducted on organizations that will carry out early recovery projects and are located in the regime areas, which deprived Assad of foreign exchange coming from abroad.
Drugs control the fate of the pound
As for the internal reasons for the decline in the pound’s value, the most prominent of which was, according to Karim, the cessation of the drug trade in Jordan. This is due to the understanding between Damascus and Amman to stop the drug trade, in exchange for Jordan helping Assad return to the Arab League through mediation with the Gulf countries in cooperation with the Sultanate of Oman.
Jordan’s border guards have also become a real obstacle to the entry of Assad’s drug smuggling shipments, so the amount of money the regime was making from the Captagon trade, which was entering the central bank’s treasury and contributing to the pound’s support, has decreased.
Economist Mohamed Bakour reported that the decline in remittances from Syrians in countries of asylum was a decisive factor in the deterioration of the pound.
“Over the past months, remittances have been active due to successive holidays, starting with Mother’s Day, then Ramadan and Eid al-Fitr to Eid al-Adha. However, after the end of those holidays, the remittances that used to supply Assad with foreign currency have dropped dramatically,” Bakour explained.
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.