As prospects of a U.S.-led military intervention in Syria hang in limbo, the foreign exchange black market for the Syrian pound (SYP) has become increasingly volatile. In countries with troubled currencies, such as Syria, black‐market exchange rates provide a reliable gauge of economic expectations. Judging by the erratic performance of the black‐market Syrian pound/U.S. dollar (USD) exchange rate, the Syrian people’s expectations have been on quite the roller coaster ride, as the U.S. Congress prepares for what will likely be a very close vote on a Use of Force resolution.
- Following Secretary of State John Kerry’s initial call for military intervention in Syria, on August 26th, the SYP experienced a one‐day drop of 24%—reflecting Syrians’ heightened fears of U.S. military conflict.
- On August 29th, two events occurred that reversed this slide. In Damascus, the Syrian government renewed its attempts to crack down on black‐market currency trading. And, over 4,000 miles away in London, the British Parliament voted down a motion authorizing military action in Syria. In consequence, the SYP rebounded by a whopping 26% over the course of two days.
- The U.S. Senate Foreign Relations Committee’s consideration of a use of force resolution seems to have once again raised Syrians’ expectations of a U.S. military strike, as it set the SYP on another slide. Since September 3rd, the pound has lost 10% of its value.
For some perspective on how the West’s march to war has affected Syria’s currency, and ultimately inflation, let’s take a look at how things have changed over the course of the past month: On August 6th, the black‐market SYP/USD exchange rate was 205, yielding an implied annual inflation rate of 191%. As of September 6th, the black‐market SYP/USD exchange rate sits at 250, yielding an implied annual inflation rate for Syria of 257%.
For more on the Syrian pound, see the Troubled Currencies Project.