Fears of soaring living costs grow as Syrian pound plunges

Fears of a new wave of high living costs have been arisen among ordinary Syrians following a remarkable depreciation of the Syrian pound after it maintained at a stable price for several months.

The Syrian pound has precipitously plunged over the past two days and was traded Wednesday in the black market at the rate of 93 pounds against one U.S. dollar, from around 70 pounds to one dollar two weeks ago.

Economists said the figure is annoying and is a serious indication that should be handled quickly. They urged the government to pump large quantities of banknotes in the market as part of the policy of intervention it has espoused since the start of the crisis one and a half years ago.

The change in the exchange rates could adversely affect the markets, as some traders might resort to raising the prices of their commodities, economists said.

A week ago, the Central Bank of Syria (CBS) issued a decision stipulating that the sale of dollar for personal purposes should be done exclusively through the Commercial Bank of Syria. The measure provides for selling citizens 5,000 dollars per month in the framework of meeting the demand on foreign currency.

However, the decision has brought counter results, as it has pushed the dollar’s exchange rate at the commercial bank to one dollar-against-87.10 pounds, up by 1-to-78 a week ago. The dollar’ s exchange rate at the black market also soared.

The central bank pledged to interfere once again and bring the prices back to normal. On Wednesday evening, Governor of the central bank Adib Mayala said the bank decided to sell the foreign currency, without any limits, to the exchange institutions according to the price of the parallel market to cover the needs for foreign currency.

During a meeting with licensed exchange firms, Mayaleh affirmed the bank’s determination to go ahead with the interference process and sell the needed foreign currency to the market in order to restore the price of the Syrian pound to its normal values.

He assured dealers that the central bank is capable of keeping the price of the Syrian pound, stressing that the foreign currency reserve is enough for that.

Earlier, the central bank issued a decision permitting licensed banks to sell foreign currency to importers according to the exchange rate set by the bank, a step seen by observers as aiming to maintain a stable exchange rate.

Mayala pointed out that the decision came within a package of measures taken to control the exchange rate, stressing that the CBS is determined to bring back the exchange rate to normal levels and to put an end to black market manipulations.

Economists have urged the central bank to take further measures to preserve the Syrian pound from further depreciation, warning that this would backfire on ordinary Syrians and make most of consumer items out of their reach.

They said the Syrians’ worries have increased, as they are no longer able to maintain their lifestyles and keep up with the rising costs.

With the sharp depreciation of the Syrian pound, the average annual household expenditure is expected to further rise as an average family will need an extra 20,000 pounds to maintain the standard of living they had shortly before the crisis.

The living costs in Syria have become cripplingly high, with the inflation rate currently stands at 39 percent, a figure that is much greater than the average pay given to workers.

Economists said people are getting poorer every month as the economic conditions are deteriorating after a package of worldwide economic sanctions that have choked Syrian economy and negatively affected all kinds of business in the country.

They said families spend more of their money on essentials such as food, rent and healthcare.

For cash-strapped families, the pain remains with almost all their bills continuing to rise far more quickly than their income.

Prices of gas cylinder have skyrocketed, and each cilynder is reportedly sold at nearly 2,000 pounds, up from 500 pounds a month ago. Diesel, which families use for heating, has become increasingly scarce due to transportation difficulties from hotspots to the capital. Also, food prices have doubled.

Many families have to make drastic cutbacks or eat into their savings, as the cost of living is growing at a rate unseen since the beginning of the crisis in mid-March 2011, while wages are not keeping up.

The United Nations’ World Food Program (WFP) has pulled non- essential staff out of Syria, suggesting that the conflict encroaching on Damascus is presenting severe problems.

The WFP said most basic food items are available in Syria, but the food security situation is deteriorating rapidly. It said about 20 international and 100 national WFP staff members are staying to help with emergency efforts to feed 1.5 million vulnerable Syrians.

Shanghai Daily