Shafaq News/ Currency markets in theKurdistan region (KRI) are seeing a “sudden” rise in the value of the Syrianlira against the Iraqi dinar, sparking discussions among experts and tradersabout its causes and potential impact on the local market.
Since the fall of Bashar al-Assad'sregime, the Syrian lira has been recovering against other currencies,especially the US dollar, which has decreased by 18 to 20% in recenttransactions.
Absence of Scientific Grounds
Ismail Ibrahim, one of the currencytraders in the dollar market in Al-Sulaymaniyah, described the currentsituation as "chaotic," pointing out that “the recent rise in thevalue of the Syrian lira has no scientific basis.”
"This increase is due to therelease of Syrian lira by previous holders… I don't believe the return ofSyrian refugees has significantly impacted this rise,” he told Shafaq News.
High Demand and Low Supply
Expert Ayman Hisham provided aneconomic analysis of the rise, attributing it primarily to the shortage ofSyrian 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 millionSyrian lira was worth just 100,000 Iraqi dinars ($76.3). Now, it has reached600,000 dinars (approximately $457.8,) stabilizing around 550,000 due to therising demand."
Hisham also highlighted thesignificant economic decline of the Syrian lira over the past decade, with itsvalue against the US dollar dropping by 270 times from 2011 to 2023.
He cited reports from the WorldBank, the UN, and the International Monetary Fund (IMF,) showing that Syria'sGDP has contracted over 85% since 2011, reaching nine billion dollars by 2023,with a further 1.5% decline expected in 2024.
Interconnection of Politics andEconomics
Jabbar Koran, spokesperson for thecurrency market in Al-Sulaymaniyah, highlighted the link between Syria'spolitical situation and its currency stability. He told our agency that majorpolitical changes, such as the formation of a new government or the fall of thecurrent regime, could gradually improve the currency's value, similar to Iraq'sexperience after the fall of Saddam Hussein’s regime.
"If the political situationstabilizes and an inclusive government is formed, the Syrian economy couldgradually improve, positively impacting the lira. However, it's too early topredict its stability,” he added.
Koran ruled out any direct impact ofSyrian lira fluctuations on other currencies, given its local nature. “Nevertheless,prices of agricultural goods imported from Syria could be indirectly affecteddue to trade ties between the two countries,” he clarified.
Meanwhile, Haori Fakher, an economicjournalist, shared with Shafaq News that the Syrian lira has been severelyimpacted by complex political and economic factors, with the ongoing war since2011 causing its value to plummet. While its exchange rate in Iraqi markets waspreviously very low, recent political developments have increased demand in Al-Sulaymaniyahmarkets, causing an “unexpected” rise in its value.
“Despite the current rise in theSyrian lira’s value, I consider it a temporary and unstable increase,” he noted,confirming that “the Syrian economy's recovery and currency stability depend onimprovements in the political situation and the formation of a new government.”