Syrian pound loses over 22% of value in six months

The Syrian pound has lost more than 22% of its value against the US dollar during the first half of this year, coinciding with the currency replacement process that removed two zeros from circulating banknotes.

According to ANHA agency’s monitoring of black-market exchange rates, the pound closed the first month of the year at 11,600 SYP per dollar. Today, the exchange rate in the capital is approaching 14,800 SYP per dollar, while in some provinces it has nearly reached 15,000 SYP, representing a decline of more than 22%.

The exchange rate closed the second month of the year at 11,900 SYP per dollar and the third month at 12,400 SYP. In the fourth month, the pound’s value declined to 13,300 SYP per dollar, while the fifth month closed at 14,000 SYP. This indicates that the rapid depreciation began in early April, with the pound losing around 2,000 SYP against the dollar between the start of the year and the end of May.

An economist, who requested anonymity, told ANHA agency that during the first week of June the exchange rate stood at 14,100 SYP per dollar. Within just three days, however, the pound lost another 500 SYP, reaching 14,600 SYP per dollar. He described this as a serious, sharp, and unprecedented collapse that the Central Bank has failed to acknowledge, as it continues to set the official exchange rate at 11,350 SYP per dollar—a gap of approximately 3,650 SYP from the current market rate. He said this large disparity reflects mismanagement of exchange-rate policy.

The economist warned of further deterioration, noting that the exchange rate has returned to levels seen before sanctions on Syria were lifted, raising questions about the effectiveness of sanctions relief.

He pointed out that the highest Syrian banknote denomination was previously 5,000 SYP but has now become 50,000 SYP. The loss of confidence in the local currency could mean that goods once purchased for 5,000 SYP may eventually cost 50,000 SYP. He added that several government services have already experienced substantial price increases, including electricity, gas, bread, and transportation fares.

Regarding the causes of the collapse, he attributed it primarily to the loss of confidence in the local currency, particularly following the currency replacement process. Citizens have not experienced noticeable improvements in their living conditions, while the rapid depreciation has encouraged dollar savings and reduced trust in the pound. This uncertainty has also driven up the prices of goods and services, as people increasingly seek foreign currency.

He also highlighted the heavy losses suffered by Syrian wheat farmers, who are forced to sell their crops at low prices while purchasing fertilizer, seeds, plowing services, irrigation, and labor at costs linked to the new dollar exchange rate.

The economist argued that the government had betrayed farmers by pricing wheat in Syrian pounds. Had wheat been priced according to the dollar and payments made to farmers in dollars, he said, the pound’s depreciation would not have accelerated so dramatically. He predicted further economic setbacks in the coming period.

Discussing the impact of the exchange-rate collapse on markets, he stated that businesses are pricing their products based on an exchange rate of 20,000 SYP per dollar rather than the officially circulated rates. As a result, consumers are forced to pay inflated prices and bear the full burden of exchange-rate volatility. 

A-H 

ANHA