Syrian regime struggles to save currency

The Syrian pound has plummeted against the dollar in recent months as the Syrian regime struggles to finance a costly war and save a state-controlled economy.
3 min read
05 May, 2015
The Syrian government has been relying on its foreign currency reserves (Getty)
State media reported on Tuesday that the Syrian central bank is pumping up to $200 million into the market to help boost the sagging Syrian pound.

Three government newspapers - Baath, Thawra, and Tishrin - carried reports Monday highlighting the move.

The central bank started selling tens of millions of dollars over the weekend as part of its plan.

This comes after the currency value plunged sharply from 150 Syrian pounds (SYP) to the US dollar three months ago to peaking at 318 SYP to the US dollar.

The official exchange rate is set at 260 SYP. The Syrian currency was trading at 292 SYP to the dollar on the black market Monday.

Syria's currency is now worth four times less than it was in 2011.

Before the Syrian uprising began, the central bank of Syria had a significantly large reserve of foreign currency, estimated at 15-20 billion dollars.

The ongoing war, along with international sactions, forced the government to deplete its foreign currency reserves, consequently inflation rates skyrocketed and currency devalued exponentially.

Timeline of the currency crisis

In 2012, the IMF reported slow and steady decline of the Syrian Pound. At that time, the government was still able to intervene in the market.
Syria's currency is now four times cheaper than it used to be in 2011.


As the conflict evolved into a full-scale war, the Syrian government lost agricultural territories and the military exhuasted the government's financial budget.

For instance, Aleppo and Raqqa, both largely out of government control, account for around half of Syria's agricultural sector.

Regime losses helped expand black market trade in Syria. The government has been struggling to contain the currency black market.

By mid-2013, black market exchange rate was 300 SYP to the dollar, when the official exchange rate was 104 SYP. In July of that year, the government passed a law criminalising unlicensed black market currency exchange businesses and individuals.

But the black market is still flourishing in Syria because people are desperate to acquire US dollars to protect themselves from currency depreciation and inflation.

Public employees, who make up a large proportion of the workforce, receive their salaries in Syrian pounds. Ahmed, a government-employed father of four daughters in Damascus who preferred not to mention his full name for security reasons, told al-Araby al-Jadeed that he makes around 150 US dollars a month, paid in Syrian pounds.

Ahmed explained that apart from security concerns, people in Syria are worried that "we are reaching a point where the money we make buys less than our most basic needs".

"As soon as I receive my salary", Ahmed said, "I seek to buy US dollars. I don't trust the [Syrian] currency anymore".

Outside Damascus, the currency crisis is more dire and the black market is wide-spread. In May 2013, EU governments decided to relax some of the financial sanctions in order to allow European banks to open branches and accounts in opposition-held areas.
"we are reaching a point where the money we make buys less than our most basic needs".

Generally, international banks remain extremely cautious when it comes to Syria-related transactions.

Most international banks refuse to transfer funds direct to banks in Syria, which is making it difficult for Syrian expats to support their families and support charities back home.

In October 2014, the Syrian government launched a campaign to restore confidence in the Syrian pound as it dropped to 220 SYP to the dollar.

As part of the campaign, some Syrian businessmen with ties to the regime allegedly sold millions of dollars to the central bank to kick-start the campaign.

The campaign was covered heavily in state media but fell short from a long-term shift. People like Ahmed, under the cynicism of war, cannot risk their humble incomes.