Shafaq News/ Currency markets in the Kurdistan region (KRI) are seeing a “sudden” rise in the value of the Syrian lira against the Iraqi dinar, sparking discussions among experts and traders about its causes and potential impact on the local market.
Since the fall of Bashar al-Assad's regime, the Syrian lira has been recovering against other currencies, especially the US dollar, which has decreased by 18 to 20% in recent transactions.
Absence of Scientific Grounds
Ismail Ibrahim, one of the currency traders in the dollar market in Al-Sulaymaniyah, described the current situation as "chaotic," pointing out that “the recent rise in the value of the Syrian lira has no scientific basis.”
"This increase is due to the release of Syrian lira by previous holders… I don't believe the return of Syrian refugees has significantly impacted this rise,” he told Shafaq News.
High Demand and Low Supply
Expert Ayman Hisham provided an economic analysis of the rise, attributing it primarily to the shortage of Syrian lira supply in the KRI markets.
He explained to Shafaq News that "high demand for the Syrian lira caused its sudden rise," adding, "Before the Syrian regime regained control of some areas, one million Syrian lira was worth just 100,000 Iraqi dinars ($76.3). Now, it has reached 600,000 dinars (approximately $457.8,) stabilizing around 550,000 due to the rising demand."
Hisham also highlighted the significant economic decline of the Syrian lira over the past decade, with its value against the US dollar dropping by 270 times from 2011 to 2023.
He cited reports from the World Bank, the UN, and the International Monetary Fund (IMF,) showing that Syria's GDP has contracted over 85% since 2011, reaching nine billion dollars by 2023, with a further 1.5% decline expected in 2024.
Interconnection of Politics and Economics
Jabbar Koran, spokesperson for the currency market in Al-Sulaymaniyah, highlighted the link between Syria's political situation and its currency stability. He told our agency that major political changes, such as the formation of a new government or the fall of the current regime, could gradually improve the currency's value, similar to Iraq's experience after the fall of Saddam Hussein’s regime.
"If the political situation stabilizes and an inclusive government is formed, the Syrian economy could gradually improve, positively impacting the lira. However, it's too early to predict its stability,” he added.
Koran ruled out any direct impact of Syrian lira fluctuations on other currencies, given its local nature. “Nevertheless, prices of agricultural goods imported from Syria could be indirectly affected due to trade ties between the two countries,” he clarified.
Meanwhile, Haori Fakher, an economic journalist, shared with Shafaq News that the Syrian lira has been severely impacted by complex political and economic factors, with the ongoing war since 2011 causing its value to plummet. While its exchange rate in Iraqi markets was previously very low, recent political developments have increased demand in Al-Sulaymaniyah markets, causing an “unexpected” rise in its value.
“Despite the current rise in the Syrian lira’s value, I consider it a temporary and unstable increase,” he noted, confirming that “the Syrian economy's recovery and currency stability depend on improvements in the political situation and the formation of a new government.”