The Central Bank of Syria took the measures to eliminate the black market in currency [Getty]
The Central Bank of Syria has raised the rate of the Syrian pound from 13,200 to 12,000 liras to the dollar, in an attempt to eliminate the black market currency exchange industry.
The move is seen as an attempt to narrow the gap between official and unofficial rates for the Syrian pound, with all the Central Bank’s bulletins – official, for banks and exchange offices, customs, and the monthly bulletin – combined into a single bulletin.
According to the official bulletin issued by the Central Bank on Sunday, the exchange rate for the Syrian pound was set at 12,000 pounds to the dollar, and 12,976.80 pounds to the euro, however, analysts believe the measures do not go far enough to tackle the currency crisis.
Economic analyst Fadi Ayash told The New Arab’s Arabic language sister outlet Al-Araby Al-Jadeed that it is clear the Central Bank is still operating without a clear monetary policy and a lack of transparency regarding domestic and foreign currency liquidity will hamper efforts to combat the country’s myriad financial issues.
The Syrian pound has collapsed since the start of the war and worsened as the conflict progressed, with economic mismanagement and corruption, US sanctions, and a banking crisis in neighbouring Lebanon seeing the currency crash from around 47 liras to the dollar in March 2011 to its current rate.
The Central Bank’s decision to raise the value of the pound is likely an attempt to narrow the gap between the official and black market rates, which coincides with efforts to regulate the currency exchange market to have only licensed companies and banks operating.
Syria has seen a plethora of black market money exchange dealers emerge since the collapse of the lira, many operating their ‘bureau’s’ from the boots of their cars or on blankets laid out on roadsides.
The Central Bank’s move will likely make more foreign and domestic cash available to businesses and ease restrictions on liquidity, but it is unlikely to strengthen the value of the lira in real terms, he said, which can only be realistically achieved via an increase in the export of goods, services, and the size of reserves, an improvement in the balance of trade and payments, and rises in remittances, aid, and foreign assistance – all things Syria is currently lacking.
Ayash is doubtful about the Central Bank’s claims that Syria had witnessed an increase in the flow of goods into Syria via land crossings – the official reason for the exchange rate move – despite imports remaining minimal, adding further doubts about transparent governance.
Without easing liquidity restrictions, especially for the business sector, the decision is unlikely to have a meaningful impact on the market, he said, and might even discourage remittances, which should rise ahead of Eid al-Fitr.
What is clear is that Syria needs a clear and consistent monetary and fiscal policy, the economist said, along with measures to boost investment, production, and exports, and to increase purchasing power.
The Central Bank said the new rules will give licensed banks and exchange institutions greater flexibility in setting suitable daily exchange rates, amid a crackdown on unlicensed currency exchanges and money transfer operations.
