Enab Baladi – Amir Huquq
Daily changes affect the exchange rate of the dollar in the black market in Syria, while the official exchange rate remains stable according to the Syrian Central Bank’s bulletins, raising questions about the mechanisms in place.
The Central Bank of Syria (CBS) announced measures to limit the gap between the official exchange rate of foreign currencies and that of the black market, defining pricing mechanisms.
According to a statement from the Central Bank on March 23, the exchange rate of the US dollar against the Syrian pound will be determined based on a study of the reality of the exchange rate in the local market.
This decision comes as part of efforts to unify exchange rate bulletins and avoid disparities and negative consequences resulting from them, aiming to reduce the gap between official and unofficial market exchange rates, and limit speculation, as stated by the media office of the Syrian Central Bank to the official Syrian news agency (SANA).
On March 21, the Central Bank of Syria issued a decision to stop civil legal action against individuals dealing in currencies other than the Syrian pound, particularly those who engaged in currency exchange before the fall of the Assad regime.
The new government permitted transactions in foreign currencies, which were previously prohibited and penalized for any dealings outside the Syrian pound, leading to a proliferation of shops, stalls, and centers that exchange dollars and other foreign currencies.
Liquidity crunch
Daily bulletins determine the exchange rates of the dollar and other foreign currencies in Syrian markets through electronic applications and social media pages such as Facebook, WhatsApp, and Telegram.
These exchange bulletins create a state of intrigue and curiosity among people about who sets the dollar price in the black market, and the mechanisms followed in pricing.
University professor and head of the financial and accounting professions syndicate branch in Daraa, Majdi al-Jamous, stated in an interview with Enab Baladi that the dollar price in the black market is determined based on market mechanisms of supply and demand alongside variables such as economic policies, particularly financial policies.
According to his description, the factors affecting the black market exchange rate today include liquidity constraints, lack of trust in the financial banking sector in general, customers’ foreign currency hoarding, and high inflation rates which increase demand for foreign currencies, consequently causing fluctuations in the black market exchange rate.
Hidden companies
Dr. al-Jamous attributed the fluctuations in the black market dollar exchange rate to two reasons: first, supply and demand mechanisms and the financing of unregulated imports, such as cars and the influx of Turkish products into Syrian markets, which are financed with foreign currency from the black market.
The second reason is hidden companies specializing in foreign currency, which existed during the previous regime and still operate today, engaging in speculation. It is in the interest of those working in these companies to see the dollar price fluctuate in the markets, as they determine the opening and closing prices daily like a stock market.
These companies exploit electronic platforms and groups that connect them to traders and individuals across all provinces.
They are adept at pricing and trading dollars, causing fluctuations in the foreign currency that impact middle and low-income earners, according to Dr. al-Jamous.
He believes that unofficial exchange companies are backed by experts and influential figures, who set the dollar exchange rate, and following the liberation, their numbers have increased significantly, maintaining communication among all traders and exchangers through social media groups, which explains the unification of dollar pricing across all centers.
The operators of these companies and traders exploit both negative and positive rumors to create significant fluctuations in dollar prices by purchasing at lower values and then selling at higher rates.
A mobile device store in Damascus Tower operates in dollar exchange – February 9, 2025 (Enab Baladi/Omar Alaa Eldin)
Floating dollar
Mohammed al-Halaq, Vice President of the Damascus Chamber of Commerce, told Enab Baladi that fluctuations in the exchange rate are normal and expected, as long as the currency is floating and not fixed like in Gulf countries. In this case, it is subject to supply and demand mechanisms, considering the specificities of the economy and its strength.
The Central Bank’s policy plays a role, raising interest rates for lenders at times, leading individuals to save, or lowering interest on current accounts, prompting individuals to withdraw funds and invest them elsewhere, according to al-Halaq.
He considered that the currency cannot be fixed unless the government stabilizes it; hence, the fluctuations in the dollar exchange rate are due to everyone relying on social media as a source for determining exchange rates.
Al-Halaq mentioned that some parties and individuals go to the markets to influence the general atmosphere by raising or lowering the exchange rate based on the cash volume available to them, either in Syrian currency to withdraw dollars or in dollars to withdraw Syrian pounds from exchange centers, thus control is exercised by individuals and does not rely on a scientific or realistic methodology, making it unpredictable. Bulletins from sites might reflect market influences.
He believes that the management of the dollar exchange rate in the black market is anonymous and managed by self-interested individuals, with prices rising when demand increases.
Regarding the existence of a unified price in the black market, al-Halaq considered it a normal matter due to the presence of exchange rate groups on social media, as all exchangers are participants or active in these groups, constantly looking at indices that influence them one way or another.
Thus, they follow certain indicators to work with, and it is certain that there is communication among those operating in the black market, and social media has increasingly influenced decision-makers.
Central Bank does not play a protective role
The exchange rates for foreign currencies differ between the Syrian Central Bank’s bulletins and the black market rates, as the Central Bank maintains the dollar exchange rate relatively stable, unlike the black market rates which experience noticeable fluctuations within the same day.
Here, university professor Majdi al-Jamous suggests that the discrepancy in pricing between the Central Bank and the black market is due to an important point: the Central Bank provides the actual and estimated price of foreign currency, distancing itself from poor trade practices.
Al-Jamous believes that the Central Bank maintains the rate it sets because it is difficult for it to engage in market mechanisms (buying and selling). The most crucial point in central banking is the intervention in markets, either by selling or buying, to maintain the stability of the exchange rate. The black market pricing exploits the public’s lack of awareness regarding the actual exchange rate in the market.
The Central Bank is expected to intervene to protect investors, individuals, and shareholders, but it has distanced itself after issuing bulletins with the true dollar exchange rate.
He pointed out what is known as “bank balance trading,” where individuals who do not receive their money from banks resort to selling their balances at a higher exchange rate in favor of buyers, providing room for traders to raise the dollar price based on demand for balance sales. The exchange rate for one dollar for bank balances exceeds 16,000 Syrian pounds.
Meanwhile, the Vice President of the Damascus Chamber of Commerce, Mohammed al-Halaq, clarified that the difference between the Central Bank’s rate and the black market is that the Central Bank does not follow a pricing policy but rather sets a fixed number that it neither sells nor buys.
Al-Halaq mentioned that when adopting a pricing policy, it should follow principles akin to global trade practices. The Central Bank does not engage in buying, selling, or ownership but solely in pricing; it merely sets a number and maintains it until adopting another pricing policy within relationships, inputs, and outputs. Thus, it adopts the rate that suits it.
A policy that undermines trust in the Central Bank
Dollar conversion in the market based on black market bulletin prices, away from the Central Bank’s rate, leads to a loss of confidence in the Central Bank’s ability to stabilize the exchange rate. Some experts believe this indicates that the Central Bank is not fulfilling its required role.
University professor Majdi al-Jamous explains the reliance on the black market exchange rate, stating that the Central Bank does not play any role, thus it merely prices and lacks the capability to finance investments or imports, or provide the cash liquidity and foreign currency reserves necessary to achieve stability or deterrence against the black market.
He stated that before liberating Syria from the Assad regime, black market traders feared any intervention by the Central Bank, but now “unfortunately, the bank is incapable,” which gives them confidence in speculation and trade.
Al-Jamous views that traders and price setters exploit the marginalization and weakening of the Central Bank’s role, the weakness of financial policies applied by both the Ministry of Finance and the Central Bank, and the low liquidity in banks, leading them to trade with individuals’ foreign currency reserves.
Exchange rate differences for foreign currencies between the Syrian Central Bank and the black market – March 23, 2025
Dollarization of the economy and its dangers
The Vice President of the Damascus Chamber of Commerce, Mohammed al-Halaq, stated that the Central Bank neither fixes prices, buys, nor sells; therefore, it is natural for trade movements to be subjected to competition.
Most commercial activities are conducted at the dollar rate so that traders do not have to worry about the rise or fall of the Syrian pound; however, there are issues with consumers who pay in Syrian pounds and not in dollars. Another problem is that Syria is moving towards dollarization of the economy, which should not be the case, according to al-Halaq.
He explained that Lebanon succeeded in this experience because its Central Bank buys and sells dollars, whereas the Syrian Central Bank should have the authority in pricing and issuing pricing bulletins to enable it to buy and sell. This requires having a sufficient reserve of dollars.
The Syrian Central Bank adopts a liquidity tightening policy to control the amount of cash circulating in the markets and limit price inflation, a policy that economists consider to be destructive to the Syrian economy.
Academic and economic expert Firas Shaabo stated to Enab Baladi earlier that liquidity tightening halts production; in economics, this is referred to as “killing demand,” as when liquidity is withdrawn from the market, demand is directed only toward necessities.
The Syrian Central Bank issued a circular on February 5 regarding foreign currency sales operations for licensed banks that are allowed to deal in foreign currency, permitting these banks to implement foreign currency sales for commercial and non-commercial purposes from their own resources.
Black market traders manipulate dollar prices under eyes of Central Bank officials Enab Baladi.
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