DAMASCUS, Syria (North Press) – The Syrian pound returned to witness a clear improvement at accelerating levels, earlier this week, after it had reached 5,000 Syrian pounds (SYP) against one dollar, without any official agency explicitly announcing the measures that led to that result. So what happened during these days?
It is not the first time that the Syrians witness a similar situation: a continuous and significant decline, followed by an improvement at the same speed within days, and often preceded and accompanied by a “media campaign”, whether through well-known media outlets or through social media.
Forced recovery
Recently, the Syrian authorities took a number of procedures which led to, what an economic expert called “forced recovery”, of the value of the Syrian pound. These procedures aim to create “forced demand” of the Syrian pound and pump the dollar into the markets; among these procedures are:
The withdrawal of the Syrian pound from the banks has been restricted, by setting a limit for daily withdrawals, which the customer cannot exceed.
This reduced the ability to buy dollars, as withdrawing five million SYP requires five days.
In return, the government has set financial requirements for larger deals, the most important of which are the purchase of cars and real estates.
The government imposed payments in Syrian pounds before documenting any contract to buy a car, a land or a real estate, according to a decision issued by the Prime Minister.
Under the Resolution 28/M, the owner must pay five million SYP through banking channels in the event of selling a car or a real estate, and one million in the event of selling a land.
Adding to this, freezing the sum of 500,000 SYP for three months at least.
Since the withdrawal limit is set at one million SYP, so that any purchase must extend to five days in order to take place, or to resort to buying the Syrian pound by exchanging dollars.
As for freezing 500,000 SYP in each sale, it would also withdraw the Syrian pound from the market for longer time.
Safe investments
However, this required further revitalization of the real estate or car market, which had not stopped at all, as the purchase of real estate and lands in addition to the acquisition of gold was one of the most important safe investments, especially in light of the collapse of the value of the Syrian pound.
A real estate expert estimated the rate of increase in demand for real estate by 30%, with the recent rise in exchange rates, and a similar rise in gold, as the rate of which was estimated at about 25%, according to the head of the Goldsmiths Association.
It seemed that the government tried to invest the activity in the real estate market, which is the most active, especially in cases of deterioration in the value of the Syrian pound, as owners of capital rush to invest their money in a safer trade, which is the real estate trade.
The decision to deposit the currency in real estate and car sales coincided with another measure that will increase real estate sales in the current period, which is:
Adoption of the real estate sales law in the People’s Assembly. The approval of this law, which will impose a tax when it comes into effect at a rate of 1% in every sale outside the organizational chart, and 2% for sales within the chart, and the law obliges judges not to confirm the sale process before a notice confirming the payment of the value of that tax.
The economic expert adds that this measure will increase real estate sales in the period before it comes into effect, in order to avoid the tax that will be imposed when the law is applied.
Moreover, because the law does not include sales that take place before it comes into force, the owners of stalled sales will seek to complete them; in addition to the fact that the commercial movement in this sector will witness activity before the law comes into effect, in an attempt to avoid paying the tax.
Since the daily withdrawal limit from the banks is set at one million SYP, the demand for the pound will increase by exchanging the dollar.
Restricting the circulation of the Syrian pound
Likewise, the circulation of the Syrian currency was restricted, as one million SYP were set as a higher limit for transfers between individuals. The withdrawal of transfers was also restricted to a higher limit of two million SYP, and even if ten people transferred ten millions (one million for each) to someone, the latter can only receive two millions in a day.
The Central Bank maintained a specific limit for the sums permitted to be transferred between governorates (accompanied by the traveler) at five million SYP, and all that exceeds, must pass through money transfers or banks.
All this led to an increase in the demand for the Syrian pound through coercive measures, which were added to previous measures, especially Decrees 3 and 4, of 2020, which criminalizes dealing in US dollar, or the circulation of information related to exchange rates other than those published by the Central Bank.
In addition, the government has recently banned the import of mobile phones, which is one of the outlets for depleting hard currency from the country.
Will it last for so long?
However, these measures will not last for long time, because they depend on administrative decisions to raise the value of the local currency, and not on strengthening it by supporting local production, especially what can replace the importer, or that can be exported, according to the economic expert.
The economic expert says that the process of supporting production depends on the speed of circulation of cash in the market, and not on its restriction, and that these measures will have a negative impact on production.
“For example: when a trader in Aleppo sells a deal of 20 million SYP to another in Damascus, he will not be able to get that value until a month passes,” he added.
He believes that the procedures related to the cars and real estate trade will lead to the suspension of that activity, and to limit it to those who are only forced to do so.
The most important thing is that the banks do not use their money, that is, they pay interest without any resources.