DAMASCUS, Syria (North Press) – “How is the green looking?” people shopping for groceries in government-held areas ask, careful not directly ask for the dollar exchange rate. Uttering the name of the American currency can quickly land an incautious Syrian in jail.
Yet the USD rules people’s lives in the government-held areas. It determines which basic needs are affordable to a majority of Syrians. It affects all goods – from a box of napkins to heating oil, cooking gas, and anything related to energy and food.
In early November 2022, the exchange rate of one USD to the Syrian pound (SYP) began to climb, reaching a historic peak of 7.000 SYP on New Year’s Eve. Naturally, the prices of next to every items skyrocketed, too.
The value of Syrian government employee’s salary plummeted to 30 USD. Economic analysts predicted an economic catastrophe as stores stopped selling certain items, then closed up entirely.
Citizens on social media threatened speculators and predicted that the USD exchange would drop.
Economic Analysis
After the winter holidays, Syria’s Central Bank adjusted its official exchange rate to 4.500 SYP to the dollar.
Shortly after, the black market rate dropped to 5.300 SYP. Nevertheless, the prices on the street did not – except for cigarettes.
People attributed the slight improvement to the central bank’s intervention. In the following week, the dollar soared to between 5.300-5.800 and plateaued at 6.000 SYP. Store prices continued to increase as well.
Muhammad Muhammad, a pseudonym for a PhD in economics, told North Press that “common people or even experts do not have proof that the Central Bank did anything. Who controls the exchange rate in Syria? A legitimate question only discussed behind closed doors.”
“A major speculation campaign occurred in the last two weeks. Hence, there is a group of speculators. Are they with or against raising the exchange rate of the dollar? I do not have an answer to this question. There must be an investigation to find out,” he added.
According to Muhammad, at the end of each year, some importers sign contracts with foreign exporters. “What happened was not normal. We do not know how it dropped to 2.000 SYP. There is no economic interpretation other than the doings of speculators and importers.”
The Central Bank “is incapable of intervening, especially since imports are estimated at 4 billion SYP and exports at 600-700 million, there is a 3.5 billion shortage. A certain group is controlling the market,” he says.
The economic expert agrees that the theory that dollars smuggled from Lebanon into Syria are the main contributor to the aforementioned phenomenon is the most likely explanation.
He stressed that the SYP’s value will continue to decrease and stabilize at 6.500 SYP against the USD, as long as the Central Bank is “meeting the minimum limit of imports.”
Victims of the Dollar
Regardless of who is to blame, civilians living in the government-held areas are going to be the main victims of exchange rate speculation.
Abu Ali Ibrahim, 60, closed his shop in Damascus’ Area 86 due to the eye-watering inflation in prices. A box of napkins costs 10.000 SYP ($1,60 according to the current rate), and one kilogram of rice goes for 12.000 SYP ($1,90).
“People cannot do without their basic needs,” Ibrahim says.
“Due to high exchange rates, the profit margin is not enough to purchase more goods. I closed for a week. Then, when the dollar dropped to 5.200 SYP, I reopened and sold according to the high exchange rate, because I had bought the goods when the prices were higher,” he added.
33-year-old Anas al-Masri, a pseudonym for a clothing shop owner in Damascus’ central Souq al-Hamra area, said, “The market has been in complete recession for two weeks. I sold only five pieces of clothing because prices increased threefold. People are limiting their expenses to food only.”
He wonders, “How can people buy a pajama for 250.000 or 150.000 SYP? Even after a slight decline, the prices are still the same.”
The decline is “imaginary,” al-Masri says, as long as prices remain the same.
He added, “No one can force a trader to sell at a fixed price, and the Price Monitoring Divisions [patrols of the Department of Consumer Affairs tasked with enforcing fixed prices] are easily bribed.”