Syria to Ration Imports to Rein in Soaring Foreign Exchange Rates

After three years of intervention by the central bank to sell foreign currency on the domestic market, the Syrian government has decided to back up its intervention with economic measures, rationing non-urgent imports to rein in the increasing drop in the exchange rate of the Syrian pound.

Damascus — Barely hours after the Syrian government declared that it would be implementing new measures to control the exchange rate of the Syrian pound, the exchange rate of the US dollar soared on the black market, nearly hitting 254 Syrian pounds. This was seen as a preemptive move by speculators, intending, according to observers, to head off any positive results from the new measures and to impose a new level for the exchange rate on the central bank, as has happened before.

Despite the decline in the dollar’s exchange rate, at the beginning of the week, to 240 pounds, the situation remains risky given the volatility of the exchange rate over the past two years.

The government identifies three fundamental reasons for the recent rise in the dollar exchange rate against the pound:

1- Pressure from importers of petroleum products on the currency market over a very short period of time. In this context, the government says the value of the oil purchased by the private sector was about $15 million.
2- Speculation on the pound exchange rate for profit or for political reasons related to the regional attitudes on the Syrian crisis.
3- Rumors spread by some websites and social media pages about the exchange rate.

The government’s new measures, however, will not go beyond three conventional steps that have been implemented in the past: rationing imports to reduce pressure on the foreign currency black market; continuing central bank intervention to sell foreign currency; and prosecuting websites and social media pages involved in rumor-mongering. Some of these measures were already implemented in the past few days.

But how much can import rationing really help reduce the dollar exchange rate in the local market?

Dr. Ali Kanaan, banking expert and professor at Damascus University, believes it unlikely that rationing imports would have a big effect in reducing the dollar exchange rate. He said, “The majority of Syrian imports are foodstuffs and perishable goods, while imports of luxury goods, which can be dispensed with, are small and limited,” adding that the crisis was enough to automatically “ration imports.