Managed float could help Syrian economy – Economic expert
DAMASCUS, Syria (North Press) – Adopting a managed float policy for the Syrian pound could mark a positive step toward economic recovery—provided it is implemented thoughtfully, with strict oversight and transparency in financial operations and exchange rate management, an economic expert said on Wednesday.
Abdul Rahman Mohammed told North Press that the success of this policy depends on key conditions. These include “effective Central Bank management to regulate the market and prevent sharp fluctuations, as well as the implementation of comprehensive economic policies to support local production and reduce dependence on imports.”
This statement follows comments made by the Governor of the Central Bank of Syria, Abdul Qader Hasriya, to the Financial Times on Tuesday, in which he confirmed the Bank’s intention to adopt a managed float for the Syrian pound. The move comes after a unification of exchange rates aimed at reducing market volatility and curbing the influence of the black market.
He also warned of the potential risks associated with a poorly executed managed float, such as rising inflation due to exchange rate instability, depletion of foreign currency reserves from constant market intervention, and an erosion of public trust in the Syrian pound—which could drive people back to using the U.S. dollar.
Mohammed emphasized that managing the exchange rate to serve Syria’s economic interests requires a deep understanding of monetary policy and its effects. He outlined two main approaches: forced devaluation or forced pegging.
“Forced devaluation,” he explained, “may inject large amounts of foreign currency into the market, potentially increasing inflation and prices while eroding purchasing power and destabilizing the economy.” In contrast, “forced pegging” could bring relative price stability, restore investor and consumer confidence, improve trade relations, and attract investment by offering cost predictability.
According to Mohammed, the most viable short-term option may be forced pegging, as it offers greater stability, whereas devaluation—if mishandled—could have adverse effects.
He further explained: “Floating means allowing supply and demand to determine the real value of the pound against the dollar—essentially setting a market-driven equilibrium price. In a managed float, however, the Central Bank intervenes in the market by adjusting the supply of dollars or pounds to influence the exchange rate.”
Nevertheless, such interventions can be costly. “These actions could lead to significant financial losses for the state treasury, often to the benefit of currency traders,” Mohammed cautioned.
He concluded by underscoring the importance of adopting carefully crafted monetary policies that consider the broader economic impact of each option. In his view, the best path forward may involve a combination of forced devaluation and managed pegging—balanced by precise regulation of currency circulation.