The Syrian pound recorded a record deterioration in its value in the parallel market on Saturday, to cross the threshold of 2300 against the dollar, according to traders and analysts told AFP, in a decline that precedes the imminent application of new US sanctions through Caesar Act.
While the official exchange rate equals 700 pounds against the dollar, the lira has seen an unprecedented decline since days.
Three merchants in Damascus confirmed to France Press that the exchange rate of the dollar in the parallel market exceeded 2300 liras Saturday “for the first time in its history”.
After nine years of war, Syria is witnessing a severe economic crisis, which was recently aggravated by the response to the Covid-19 epidemic.
The accelerated economic meltdown in neighboring Lebanon, where many Syrians have deposited their money, also made the situation worse in Syria.
Two analysts told France Press that fears of the repercussions of the implementation of the Caesar Act on June 17, which imposes sanctions on those cooperating with Damascus, is an additional reason for the devaluation of the lira.
Haikou Weimen, director of the Syria Program at the International Crisis Group, predicted that with the entry into force of sanctions, “dealing with Syria will become more difficult and risky”.
Caesar Act, which Damascus denounced on Wednesday, imposes financial restrictions on Syria, including stopping reconstruction aid.
It imposes sanctions on governments and companies that deal with Damascus, including Russian companies.
According to the researchers, the conflict of prominent businessman Rami Makhlouf, the cousin of President Bashar Al Assad and one of the pillars of his economic system, with the authorities has negative repercussions on the confidence factor.
Weimen said the crisis of Makhlouf, who owns the largest telecommunications company in Syria, was recently banned by the authorities from traveling and withheld reserves of his money, “scaring the wealthy”, “They feel that no one is safe”.
Most Syrians live below the poverty line, according to the United Nations, while commodity prices have doubled across the country during the past year.
A spokeswoman for the World Food Program (WFP), Jessica Lawson, told France Presse that any further depreciation of the lira would reflect a rise in the prices of the main food items that are being imported such as rice, pasta and lentils.
She warned that high prices “threaten to drive more Syrians to hunger, poverty and food insecurity, while purchasing power is constantly eroding”.
The Central Bank of Syria last month warned in a statement that it “will not hesitate to take any action against any manipulator of the Syrian pound, whether from institutions, companies or individuals,” affirming its intention to take “all measures to restore exchange control”.
Syria has been experiencing a bloody conflict since 2011, killing more than 380,000 people and causing enormous damage to the infrastructure and productive sectors, and displacing and displacing millions of people inside and outside the country.