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Central Bank adopts black market mindset to control Syrian pound: Experts

The Syrian Central Bank has applied new measure to combat black exchange market by selling US dollar to traders and importers at a slightly lower rate, seeking for a complete control on the exchange market players.

The regime fixed the price of dollar used to finance imports at 3,375 SYP, provided that retailers are supplied within 10 days. This measure confirms previous reports that the regime is dealing in dollars, and raises questions about its impact on the prices in Syrian markets, especially of imported goods.

The Central Bank also acted to curb movement of cash within provinces to up to 5 million pounds and imposed a ceiling of up to one million pounds on transfers within government-held areas to reduce the demand for dollars, Bankers and business people told Reuters.

The Central Bank of Syria told banks last week to cap withdrawals at 2 million pounds ($572) from an earlier limit of 15 million pounds, according to Reuters.

Researcher and Professor in economics Rifaat Amer does not believe that the regime’s approach will lead to any substantial decrease in the prices of imported materials, not without support from its allies. According to him, it is likely that the regime has in fact received temporary support in as crucial a period as the upcoming elections.

“The suffering of the Syrian people does not concern the regime, all that matters is its own survival,” Amer said.

The Syrian pound has rebounded from an all-time low struck during the last two months after the regime tightened controls on bank withdrawals and internal transfers and restricted movement of cash around the country to stop dollar hoarding.

The pound was trading around 3,200 to the U.S. dollar on Saturday, its strongest level for two months. It rose 16%, reversing losses that sent the currency to an all time low of 4,000 earlier in March.

According to Amer, fixing the exchange rate for industrialists and traders does not eliminate the black market. If the exchange rate is fixed at a specific limit, it will only last for a short period since the variables causing the decline of the Syrian pound, such as the halt in production, poor macro and microeconomic management, and the dominant war economy, remain present.

Expert at the Jusoor Studies Center, Khaled Al-Tarkawi, also minimized the impact of this measure on the prices of imported goods, since the regime’s central bank is still speculating on dollar prices, and buying and selling through its subsidiary companies at different prices. “The procedure is nothing more than an attempt to fix the exchange rate at 3,400 SYP, so that traders resort to buying from companies approved by the Central Bank.”

While selling the dollar allows the regime to stabilize the exchange rate of the pound, Al-Tarkawi explains, “However, it is no longer in control of the price of the pound, since it is used in areas under SDF control and in northern Syria.”

It is possible that the regime’s goal is to collect data on dollar circulation in the Syrian market outside of trades taking place through Central, according to Al-Tarkawi.

The currency’s fall has driven up inflation and aggravated hardship as Syrians struggle to afford food, power and other basics.

The pound had traded at 47 to the dollar before protests against Bashar al Assad’s rule erupted in March 2011.

Zaman Al Wasl
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