The Syrian pound’s exchange rate has seen a noticeable decline in recent days following the end of the Eid al-Fitr holiday, with the “Damascus dollar” in the parallel market reaching 12,280 old Syrian pounds for buying and 12,350 pounds for selling, marking an increase of between 200 and 300 pounds on Tuesday and Wednesday compared with pre-Eid levels.
This decline comes as the effect of the financial remittances that flowed into Syria before the holiday has faded. Expatriates are accustomed to doubling their transfers during religious occasions, providing additional dollar liquidity that temporarily supports the pound’s stability. With the season over, demand for the dollar has returned, putting renewed pressure on the local currency.
Sudden decisions deepen the crisis
Another factor tied to regional shifts is the war underway in the Middle East, which has also been linked to this decline. It plays an indirect role in boosting demand for the dollar in neighboring markets, negatively affecting Syria, which remains highly vulnerable to geopolitical and regional changes given the fragility of its economy and its close connection to exchange markets in the region.
But the main factor that traders believe may be behind the latest wave of decline is a sudden decision issued by the Syrian Petroleum Company, requiring agents and fuel station owners to pay for petroleum products and gas in US dollars, while keeping sales to end consumers denominated in Syrian pounds.
This mismatch between the import and sales mechanisms created exceptional demand for the dollar in the local market, as traders were forced to secure dollar liquidity to settle their dues to the company, increasing pressure on the local currency.
As the negative repercussions of this decision mounted, the Syrian Petroleum Company reversed it on Wednesday, in a move seen as an attempt to absorb part of the pressure resulting from rising demand for the dollar. However, the impact of the reversal may not be immediate, as the market is still suffering from the disruption the decision caused over the past few days.
Temporary stability and exposed fragility
If the Syrian pound has seen a noticeable decline in recent days, pushing it back down to low levels exceeding the 12,300-pound threshold for selling, a look back shows that the local currency had recorded relative stability in the period preceding the Eid al-Fitr holiday.
It had managed to hold at levels ranging between 11,900 and 12,050 pounds for selling, supported by the inflow of external remittances that expatriates are accustomed to doubling ahead of religious occasions, providing exceptional dollar liquidity that eased demand for hard currency and gave the market a margin of temporary balance.
But with the season ending and the pace of remittances returning to their usual rates, the fragility of this stability was quickly laid bare, and the pound returned to its downward path, exacerbated by the Syrian Petroleum Company’s decision. The monetary situation in Syria thus reflects a fragile economic reality, in which the local currency is buffeted by internal and regional factors, without any real signs on the horizon of its ability to hold firm away from seasonal influences or temporary administrative decisions.
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