A package of reasons are behind the soaring exchange rate of the U.S. dollar against the Syrian pound that has lost more than half of its value since the outbreak of the crisis in the country two years ago, economists said.
A dollar is sold at the black market at 100 pounds, the highest over the past two years, while shortly before the crisis, the dollar stood at 46 pounds.
Economist Wael Al Habash told local media that the Central Bank of Syria was the sole responsible for the high exchange rate and hinted to the possibility of manipulation at the exchange rate of the pound to achieve material gains resulting from the fluctuation in the exchange rate, thus the bank can achieve billions of pounds to supplement the state treasury in these difficult economic conditions.
Habash said there were other reasons for the depreciation of the Syrian pound, mainly the semi-paralyzed commercial movement, adding that the bulk of liquidity in Syrian pounds is confined to real estate and cars that have been brought a standstill for more than a year.
In addition, he said Syria’s wealthy class and upper middle class’ capitals fled the country during the first year of the crisis, easing the pressure on the Syrian pound against the dollar during the second year of the crisis.
The Commercial Bank of Syria is the one which raises the price of the official exchange rate of the Syrian pound against other currencies, he said, adding that this has encouraged the black market to continue to raise the price of the dollar against the pound, although the demand for the dollar has not increased.
Economic expert Mohamed Osman told the Syrian al-Iqtissadi website that the pound has plunged for several reasons, including a ban on the import of Syrian oil, which has deprived the treasury of more than one-third of its revenues and thus reduced the state budget.
The second reason, he said, is the decline in non-oil exports due to the crisis which has led to a retreat in the exports of agricultural and industrial and the reluctance of Syria’s main trade partners, the countries of the European Union and some Arab countries, to import from Syria.
Most countries have showered Syria with non-stop economic sanctions to throttle the Syrian government and speed up its collapse. The sanctions have had negative impacts on all aspects of life, especially the pound depreciation which has made prices of all consumer items skyrocket.
Osman said the increased import which has reached almost 40 percent during 2011-2012 is the third reason, adding that the lack of income from tourism is another reason.
However, treatment is still possible, he said.
Osman believed that the government should work immediately to find alternative markets for Syrian exports, mainly those of friendly countries such as Russia, and to restore the Syrian citizen’s confidence by working to lower food prices and reduce inflation.