The Syrian pound has recently witnessed a continuous decline at a steady pace, exceeding 6,000 pounds per U.S. dollar for the first time in its history. This comes in conjunction with the exacerbation of economic crises plaguing the areas controlled by the Assad regime, especially the fuel crisis, which caused paralysis of vital sectors amid the regime’s inability to find any solutions.
On Sunday, the exchange rate of the Syrian pound collapsed to the level of 6,050 against the dollar, according to the site Lira Today specialized in monitoring the prices of the Syrian currency. It has lost a fifth of its value before foreign currencies during the past two months.
With the Syrian pound continuing to bleed at an almost regular pace over the past three weeks, expectations suggest it could fall to unprecedented lows.
Regarding the reasons for the recent decline in the value of the Syrian pound, economic analyst Dr. Yahya Al-Sayed Omar told Orient Net that this is due to a number of internal and external reasons.
Mr. Omar stated that the internal reasons are related to the increase in demand for the dollar and the increase in the supply of the pound in the Syrian market. He explained that the increase in demand for the dollar is due to the need to import additional quantities of fuel from the international market as a result of the almost complete lack of electricity, which led to an increase in dependence on fuel as a main carrier of energy. The import of fuel leads to a sharp increase in demand for the dollar.
He pointed out that the increase in the supply of the pound is due to several factors, including the exaggeration of relying on deficit financing through the continued printing of the Syrian pound without a parallel production balance. The Syrian banking system has completely lost its effectiveness, as the majority of the Syrian currency is outside banks. Companies and individuals do not deposit in banks unless they are obligated to do so.
Mr. Omar pointed out that the amount of money outside the banking system is estimated at more than 20 thousand billion pounds, which is a huge number for the Syrian economy. This huge number outside the banking system and outside the production process tends to speculate at any shake in the value of the pound, which is responsible for the continued decline.
As for the external reasons, Mr. Omar believes that they include two axes, the first is caused by the Turkish bombing of oil and gas stations in the areas of the SDF militia. It was supplying the regime’s areas with part of its oil and gas needs, and thus a stifling fuel crisis occurred in the country that led to a new disruption in production tools, and the country’s entry into a state of semi-stalemate, which led to high fears of an economic collapse, and thus the rate of “dollarization” increased– that is, the replacement of the pound with the dollar.
The second axis is related to the lack of support provided by allies, Iran and Russia. The weakness of support is due to the economic crisis of the allies on the one hand, and a desire to pressure the regime on the other, especially since there are press reports that the regime is not responsive to political solutions proposed by Russia.
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.