The Syrian pound has hit a new low against the US dollar as its main backer Iran navigates renewed social unrest and regional tensions.

In this file photo, a Jordanian money changer exchanges currency for customers during their travel to Syria, at Jordan's Jaber border crossing, near Syria's Nassib checkpoint, near Mafraq, Jordan, October 25, 2018.
In this file photo, a Jordanian money changer exchanges currency for customers during their travel to Syria, at Jordan's Jaber border crossing, near Syria's Nassib checkpoint, near Mafraq, Jordan, October 25, 2018. (Reuters)

The value of the Syrian pound keeps hitting record lows against the US dollar amid the rising cost of living, geopolitical tensions, and continuing devastation in the country.

The most recent fallout came after the US assassinated top Iranian general Qasem Soleimani in Iraq earlier this month. Soleimani oversaw Tehran’s proxy wars across the Middle East, including Syria and Iraq. 

Ever since, Syria’s national currency has showed a more than a 10 percent slide, with $1 costing as much as 1,020 Syrian pounds, while it was traded at 47 to the dollar before the war began in 2011.

Panic buying

The killing of Soleimani and its regional fallout isn't the only reason behind the fall of the Syrian pound, which has kept crumbling as the Syrian war progressed over the past nine years. 

Now local events in neighbouring countries such as Lebanon can have an impact on the Syrian currency. When people in Lebanon began protesting against long-standing corruption and insufficient basic services in mid-October last year, Syria's inflation showed a sharp increase.  

Many Syrians have deposited their money in Lebanon since the beginning of the war and the Syrian pound took a battering as Lebanon's tight transaction controls of hard currency amid the protests made it difficult for Syrians to move their cash deposits elsewhere.

During the Lebanon protests, in an attempt to save their savings, panicked Syrians began using dollars for transactions and hoarded their currencies. 

Syria's deeply rooted internal problems also play a great part in its failing economy, but any major regional development can put Syrians on a high alert and lead to the fluctuation of the Syrian pound.

Iran’s hand in the economy

The United States, the European Union and some Arab countries began imposing sanctions on Syria in 2011, following the regime leader Bashar al Assad’s brutal crackdown on the peaceful protesters. Since they weren’t imposed by the United Nations, the sanctions technically don’t prevent the Syrian regime from having economic ties with many countries. 

However, by having its varying sectors, including the oil industry, banking, some companies and individuals including Assad and his relatives targeted, the Syrian regime became increasingly dependent on Iran, its ally in its war along with Russia.

Iran is believed to have deposited hundreds of millions of dollars in the country’s reserves, according to Reuters citing bankers familiar with the Syrian sector. 

Then in 2018, the Office of Foreign Assets Control (OFAC) of the US Department of Treasury announced tougher sanctions as it warned countries involved in shipping oil and gas to Syria and added some Russian and Iranian companies to its sanctions list.

Additional sanctions on Syria on January 2019 followed with the EU placing more travel bans on businessmen and freezing assets of some additional individuals and companies.

Amid increasing tensions between Tehran and the US following Soleimani’s death, Washington placed more measures on Iran, a move likely to challenge Tehran’s ability to support the Syrian regime financially.

The war keeps devastating

The Syrian regime and Russia keep bombing the country in an attempt to take over the last rebel-held region, Idlib. As the Syrian regime’s war debt keeps piling up, mainly to its ally Russia, the wrecked country needs an overhaul. According to the UN, the cost of the war stands at $388 billion

On the civilian side, Syrians have experienced a fuel crisis and struggle to afford basic necessities. This has resulted in protests in both regime-held and rebel-held areas, where some 350,000 Syrians have fled a relentless offensive since December. At least 313 civilians have been killed in Idlib since November 2019. 

Meanwhile, many countries refuse to contribute to the re-construction process as long as Assad clings to power, what they see the obstacle for a political settlement. 

Source: TRTWorld and agencies