Syrian pound sinks to historic low on the parallel market

Syria’s currency has hit its lowest level on the parallel market, according to online applications used to track its value.

On Tuesday, the Syrian pound was trading at more than 11,000 to the United States dollar on the parallel, or black, market.

On Tuesday, the Central Bank of Syria devalued the official rate at which foreign currency money transfers could be withdrawn to 9,900 Syrian pounds to the dollar.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 President Bashar al-Assad erupted in March 2011.

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.

The World Bank had projected a 3.2 percent contraction in Syria’s 2023 economic output, due to continuing conflict, high grain and energy prices and shortages, and water scarcity that is limiting crop output.

And in February, parts of Syria and Turkey were hit hard by devastating earthquakes, further stressing Syria’s population, millions of whom were already displaced and battling hunger.

In the wake of the earthquakes, the World Bank in February revised its prediction down by another 2.3 percentage points to 5.5 percent for the year.

Following the disaster, an unprecedented funding crisis in Syria forced the United Nations World Food Programme (WFP) to cut assistance to 2.5 million of the 5.5 million people who rely on the agency for their basic food needs. Aid deliveries and humanitarian convoys to affected areas have been at the mercy of international political tensions.

The devaluation was being fueled by the onset of stagflation, a term referring to the combination of high inflation and economic stagnation, economic analyst Nisrine Zreik told Reuters.

“The rise is a result of a weakness in the Syrian economy in general and the production sector in particular, in addition to the increase in imports,” Zreik said.