Search For Keyword.

New decision by Central Bank threatens greater collapse of Syrian pound

The Central Bank of Syria issued a circular raising the daily withdrawal ceiling from bank accounts opened for natural and legal persons from 15 million SYP to 25 million SYP.

The bank justified its decision by saying that it aims to manage the exchange rate to limit speculation on the Syrian pound and follow up on the use of funds withdrawn from customers’ accounts, with the aim of giving greater flexibility to customers in using their bank accounts.

On the other hand, economic analysts saw that this measure contradicts the economic logic, which says that in the event of a collapse of the currency exchange rate, the Central Bank must reduce the liquidity in the markets, by raising the interest rate or by restricting the volume of daily withdrawal of funds.

Damascus-based analyst Marwan Qweider told Eqtsad that raising the daily withdrawal ceiling will mean an increase in cash liquidity in the markets, and these withdrawals will most likely go either to buy gold or to buy dollars, because the Syrian currency is currently witnessing an unprecedented collapse.

Qweider stressed that this procedure serves a certain category of businessmen and war-mongers who own large bank accounts in the Syrian pound and are afraid of its depreciation, so the bank has provided facilities for them to withdraw it.

On July 19, the Central Bank of Syria devalued the official rate at which foreign currency money transfers could be withdrawn to 9,900 Syrian pounds to the dollar.

It marks a significant collapse since the beginning of the year, when the parallel market rate hovered around 6,500 and the transfer rate was 4,522.

The pound had traded at 47 to the dollar before protests against Bashar al-Assad erupted in March 2011 but now is being trading for 13,000 SYP.

Since then, a bloody conflict, now its 12th year, has killed nearly half a million people and displaced half of the country’s prewar population of 23 million. This, combined with Western sanctions, a currency squeeze linked to neighbouring Lebanon’s economic free fall, and the government’s loss of its northeastern oil-producing territories, has triggered a financial meltdown. (Eqtsad, Al-Jazeera)

Total Comments (0)

Comments About This Article

Please fill the fields below.
*code confirming note