Syrian Pound’s Decline Pressures Markets, What Are the Causes?

Syrian markets have seen a new wave of price increases in recent days, as the US dollar rose to about SYP 13,350 on the parallel market on Thursday, April 16. The increase was immediately reflected in the cost of basic goods, with clear price differences between provinces.

The rise comes as the gap between the official and parallel exchange rates continues. The Central Bank of Syria is still fixing the exchange rate at 11,100 Syrian pounds, while the dollar continues to post higher levels in the actual market.

Prices Vary Across Provinces

Enab Baladi correspondents recorded differences in prices between provinces. In Quneitra, southern Syria, some goods were relatively cheaper, with Egyptian rice at about 10,000 Syrian pounds, $0.75, per kilogram, sugar at 8,000 Syrian pounds, $0.60, and cooking oil at 26,000 Syrian pounds, $1.95.

In contrast, chicken prices in Suwayda, southern Syria, rose to between 35,000 and 40,000 Syrian pounds, $2.62 to $3.00, per kilogram, compared with about 32,000 Syrian pounds, $2.40, in both Damascus and Quneitra. Rice reached 12,000 Syrian pounds, $0.90, while sugar was about 8,500 Syrian pounds, $0.64.

In Damascus, vegetable oil was selling for 27,000 Syrian pounds, $2.02, rice for about 11,500 Syrian pounds, $0.86, ghee for 48,000 Syrian pounds, $3.60, and pasta for 12,000 Syrian pounds, $0.90.

In Latakia, western Syria, vegetable oil was also recorded at 27,000 Syrian pounds, $2.02, rice at about 12,000 Syrian pounds, $0.90, and sugar at about 8,500 Syrian pounds, $0.64.

As for vegetables, tomato prices ranged between 10,000 and 18,000 Syrian pounds, $0.75 to $1.35, depending on the type, while potatoes sold for between 6,000 and 10,000 Syrian pounds, $0.45 to $0.75. In some areas, lemons reached 22,000 Syrian pounds, $1.65.

A comparison with data from last March shows that some staple goods, including sugar and rice, remained at broadly similar levels, rising by between 500 and 1,000 Syrian pounds. Other items, such as cooking oil, posted clearer increases, reflecting their direct connection to the exchange rate.

At the same time, bigger differences appeared in meat and vegetable prices, both in terms of increases and variation between provinces. This points to the effect of local factors, such as transport costs and the availability of production, in addition to the impact of the dollar.

Declining Production Increases Demand for Dollars

Economist Alaa Baldiya attributed the rise in the dollar exchange rate to the continued decline in local production. He said the closure of industrial facilities, including some ceramic factories recently, is pushing the market toward greater dependence on imports.

He explained that this dependence raises demand for foreign currency, since imports are paid for in dollars, which is directly reflected in the exchange rate.

Baldiya said the current rise in the dollar is “not temporary, but a cumulative result of weak production and reliance on imports,” and he expected that trend to continue under current economic conditions.

Liquidity Lock-Up and Its Temporary Effect

Baldiya also said that the earlier stability of the exchange rate was not the result of any real economic improvement. Instead, he said, it came from a policy of “locking up liquidity,” which limited people’s ability to buy dollars.

He added that restricting withdrawals and reducing the money supply in the market led to a temporary drop in demand for dollars, before liquidity gradually returned and the exchange rate began rising again.

Weak Intervention and Continuing Pressure

At the same time, monetary conditions point to the limited ability of the central bank to intervene effectively to support the Syrian pound, given the weakness of usable foreign currency reserves.

Signs of a liquidity squeeze, including delays in salary payments, are also worsening instability, at a time when the Syrian economy remains heavily dependent on imports, keeping demand for dollars high.

In light of these factors, the Syrian pound appears vulnerable to further decline, in the absence of real production-focused reforms capable of easing pressure on the market and creating a sustainable balance between supply and demand.

Proposals to Support the Syrian Pound

In earlier comments to Enab Baladi, Dr. Ali Mohammad outlined key steps to improve the value of the Syrian pound.

These include preparing and rehabilitating Syrian oil wells to reduce the import bill, especially with global oil prices rising and regional tensions increasing costs and draining foreign currency reserves.

He also called for policies that would make it possible to import raw materials used in manufacturing and improve infrastructure, in order to reach production levels sufficient for the local market and secure an “export surplus” that could restore balance to the national currency.

The post Syrian Pound’s Decline Pressures Markets, What Are the Causes? appeared first on Enab Baladi.