BALADI NEWS
The Syrian currency's collapse is going faster than it could be imagined for a war-torn country, reaching its lowest point since being printed exactly 100 years ago.
At the start of the Syrian crisis in March 2011, 1 US dollar equalled 50 Syrian pounds. Trading is now at 750 pounds to the dollar on the black market, up from 500 pounds in early September.
The Syrian regime's government insists the exchange rate is nothing but an illusion, fixing its 2020 budget at a mythical rate of 435 pounds to the US dollar. Because of severe fluctuation, market pricing is on hold and so are bank loans, factory production and any new contracts in the public and private sectors.
The fluctuating exchange range has made it impossible to fix the price of anything produced or sold in Syria or to determine its profit margin, bringing the economic cycle to a halt.
The ripple effects have been devastating to day-to-day transactions for Syrians. With their savings long gone, they mostly rely on monthly income that is already razor-thin after years of war. Their income has been further reduced to comically low levels because of the dollar surge.
Monthly salaries of A-level state employees are just less than $70, while staff members who are the backbone of the state and civil service earn $40-$50 per month. Private sector managerial posts earn high wages but none exceed the $400-per-month benchmark, which is barely enough for a decent living.
On November 21, state salaries were raised by 20,000 pounds a month ($27) and pensions by 16,000 pounds ($21). That’s the largest increase in Syrian history, expected soon to apply to the private sector as well, regardless of what the original salary was.
In October, hopes were momentarily raised that Syria would be regaining its undamaged oilfields in Kurdish-controlled areas east of the Euphrates River. That would have helped reduce Syria’s dependence on Iran and provided much-needed cash to boost the Syrian pound, pay wages, fund reconstruction and partially contribute to the Russian war effort. That did not happen, however, after the Trump administration announced it would be keeping the oilfields to itself, ostensibly, to prevent an Islamic State comeback.
The Syrian regime's government has been trying to solve the crisis, with zero results. The authorities started with a massive clampdown on petty exchangers in the money market followed by banning the import of “unnecessary items” that “devour” the nation’s reserve of American dollars. The regime's government said it will only allow the import of products that don’t have a “made in Syria” alternative, hoping to boost Syrian products and preserve the country’s reserve of foreign currency, thus “choking” the dollar.
Then came the comical initiative of Syrian businessmen, who pledged to donate money in US dollars that would be automatically converted into Syrian pounds to elevate the Syrian currency. At a meeting September 27, tycoon Samer Foz reportedly contributed $10 million. It is not known who else paid what but their initiative did not work and the exchange rate continued to rise.
“It had no effect” said Syrian analyst Amer Elias, “because it’s these exact same people who are profiteering, whether from the fluctuation or from the giant gaps in rates of the Syrian government and those of the black market.”
Source: Arab Weekly.