Bankers confirmed that the Central Bank of Syria is reluctant to back the struggling Syrian pound. They cited that the government institution’s chosen measure aims to safeguard the country’s remaining foreign reserves.
We believe that this event is important in the forex realm. After all, it can impact our traders reading the latest developments from Syria’s neighboring countries in the Middle East. Based on the report posted online by international news firm Reuters, the Syrian pound plummeted to a new record low on Sunday, February 21, with a scramble for US dollars.
Bankers and dealers affirmed that this event transpires in Syria that has been hard-hit by sanctions, and experiencing a serious foreign currency crunch. However, the Central Bank of Syria reportedly vowed to intervene last week to prop up the collapsing local currency. The Syrian pound’s breakdown has driven up inflation as Syrian citizens grappled for basic necessities like power and food.
Traders affirmed that it cost as much as 3,450 Syrian pounds to purchase 1 US dollar on the street on Sunday. This amount is over 18 percent lower than last month’s culmination. Last summer saw the last freefall of the Syrian pound. The currency hit the psychological barrier of 3,000 Syrian pounds to the US dollar. This event transpired over fears of harsher US sanctions worsening Syria’s dire economic situation.
A major Damascus-based licensed exchange dealer remarked that the US dollar had been rising in Syria. The demand has far surpassed supply following months of relative stability in the 2,500-range. Additionally, an Aleppo-based dealer revealed plenty of demand on US dollars, yet hard currency is not accessible.
Syria has undergone years of Western sanctions. It has also seen a devastating civil war. The Syrian pound had traded 47 to the US dollar before demonstrations against President Bashar al-Assad’s authoritarian administration erupted in March 2011. This unrest resulted in war.
From a June 2020 New York Times report, we learned that Syria’s government salaries have become almost worthless. The Syrian pound’s value has dwindled considerably that people shared pictures on social media of banknotes utilized for rolling cigarettes. Consequently, with falling living standards, Syrian people have staged massive protests.
The ten-year conflict has had a dire impact on the Syrian economy. The country’s government, apparently, is unable to resolve its dilemmas on its own. Hence, we believe that the ongoing foreign currency crunch in Syria needs to get addressed as soon as possible by the country’s central bank with the assistance of its neighboring allies.
Rebuilding the Syrian economy surely cannot be done overnight. Nevertheless, the Syrian government administrators should not ignore the people’s human rights and the tough US sanctions. We believe they should act now with Middle Eastern nations’ help they have strong diplomatic ties with and relevant international organizations. This action can resuscitate the sinking Syrian pound and the country’s economy over the long term.