Syrian National Currency Takes a Plunge

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A bundle of Syrian pounds and U.S. dollars is seen in Amman in this 6 December 2011 file photo. (Photo: Reuters - Ali Jarekji)

By: Nadeem Mohammed

Published Wednesday, June 19, 2013

Damascus – This week brings unprecedented economic news to Syria as the Syrian pound is further depreciated against the US dollar. According to the most recent bulletin of foreign exchange rates, the price of the dollar has exceeded SP200.

The potential “collapse of the Syrian currency,” as one economic analyst put it, was on everyone’s mind.

Central Bank of Syria head Adib Mayala announced that as of this week the bank will resume the sale of foreign currencies to local banks in order to finance imports based on the needs of the market. The Central Bank will control the prices of imported goods that are bought with the foreign currency it is supplying in order to ensure the fair pricing of imported goods and to bring the exchange rate back to normal levels.

Mayala also announced that, in order to meet private citizens’ demands for such currencies, the Central Bank will immediately infuse an amount of foreign currency into the local market through exchange institutions and the Commercial Bank of Syria at affordable prices.

Mayala confirmed that the exchange rate increase is not justified and the measures taken will address its root causes.

An economic analyst, who preferred to remain anonymous, criticized the Central Bank of Syria for selling large quantities of dollars to exchange companies at the wrong time.

It would be best, he said, to limit dollar exchanges to finance food and pharmaceutical imports so as not to squander the foreign exchange. He pointed out that this step, which he suspects is part of a “corrupt deal,” is partly why the exchange rate has reached this level.

Yasser Meshaal, an economics professor at the University of Damascus, holds the Central Bank responsible for the increase due to its “mismanagement” of the crisis and its lack of credibility with most Syrians. He explained how the Central Bank followed a fragmented economic policy by overbidding and pumping liquidity into banking companies that were mostly “unpatriotic,” serving as an umbilical cord nourishing the black market.

Meshaal listed additional factors that contributed to the depreciation, including anemic production levels and declining investments in the country.

A Syrian source told Al-Akhbar that the dramatic depreciation is linked to political developments, especially the US position on arming the opposition. Money traders moved to accumulate as much hard currency as possible in order to preserve the value of their savings in Syrian currency.

This article is an edited translation from the Arabic Edition.

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