Syria devalues currency

The Central Bank of Syria sharply reduced the value of the Syrian pound on January 2, weakening the official exchange rate from S£3,015 to the US dollar, to 4,522.

On the black market, the dollar currently trades for around S£6,500, Reuters reported.

The national currency previously traded at 47 to the dollar, before the 2011 pro-democracy protests against the government and the start of the ongoing civil war. Many countries introduced sanctions against the regime.

Monday’s devaluation was the second in less than four months. The central bank weakened the currency from S£2,814 to S£3,015 against the dollar in September last year.

Year-on-year inflation reached 139% in 2020 and remains above 100% according to estimates by Fitch, as Syrians struggle to buy food, electricity and other essential items.

“Once a middle-income country, 60% of Syrians are now deemed food insecure,” reports humanitarian organisation Etana.

The Syrian government has attempted to control the value of the currency by “constricting the money supply of Syrian pounds” and increasing foreign exchange reserves through “seizing assets, limiting imports and implementing new or higher taxes and fees”, Etana says.

Etana describes “four divergent exchange rates” in 2022 which the regime uses to extract “significant margins of profit from almost every conversion that takes place in the country”.

The pound’s collapse in 2021 was attributed in large part to neighbouring Lebanon’s financial crisis. From November last year, Lebanon officially slashed the S£1,507 to the dollar rate adopted a quarter of a century earlier to 15,000 – closer to street rates which reportedly hit over 35,000 in May.

Syria’s economic situation deteriorated further after the government lost its north-eastern oil-producing territories.

Several regions in the north of Syria reportedly switched to using the Turkish lira last year amid the devaluation of the pound and high inflation. Turkey has been occupying parts of northern Syria since 2016.

In September 2021, the lira traded at around 8 to the US dollar but fell to nearly 19 against the dollar in December last year. Turkey is also struggling to control high inflation.

Hundreds of thousands of Syrians have been killed and over 10 million displaced in the last decade, according to United Nations estimates.