2023-08-27 08:20:09
Enab Baladi – Jana Al-Issa
At the end of last July, the Ministry of Economy of the “Salvation Government” in Idlib issued a decision obligating dealing in US dollars instead of the Turkish lira for buying and selling in the “Al-Hal” market. It attributed its decision to the instability of the exchange rate of the Turkish lira, and the exposure of farmers and merchants to large losses due to the forward sale.
The decision included adherence to the dollar in all buying and selling episodes in the market, and in the event of direct payment in the Turkish currency, it is calculated at the upper limit according to the approved screen in the market, under penalty of accountability for violators.
Before the decision to adopt the dollar in the “cardamom” market, the ministry decided earlier to sell medicines locally as well, according to their price in dollars, coinciding with the unprecedented decline in the Turkish lira once morest foreign currencies.
The Turkish lira fell to unprecedented levels once morest the dollar, coinciding with the period of the presidential elections in Turkey.
During the last period, it exceeded 27 pounds per dollar in northern Syria, in an unprecedented value since the adoption of the new pound in Turkey in 2005.
Forward sale only
Hamdo Al-Jassem, the Public Relations Officer at the Ministry of Economy of the Salvation Government, said that the decision came following several sessions between the ministry and a number of farmers, merchants and economists, to issue the circular stipulating dealing in dollars in the “Al-Hal” markets, and keeping the daily trading operations in Turkish lira.
Al-Jassem explained to Enab Baladi that the decision does not include the obligation to price vegetables in retail markets in US dollars. However, as a result of the complaints of farmers and merchants in the “wholesale” markets due to dealing in Turkish lira, specifically the futures sales between the farmer and the trader, these groups were forced to deal in dollars.
Al-Hal market in the city of Idlib, northern Syria – August 9, 2023 (Enab Baladi / Shams al-Din Matoon)
Dealers and customers are not satisfied
The “rescue” decision was not well received by the merchants in the “Al-Hal” markets for many reasons, according to what Enab Baladi monitored.
Muhammad Qatee’, a trader in the “Al-Hal” market in Idlib, believes that it is difficult to implement the decision within the daily dealings of local commodities whose prices change with supply and demand, in addition to their purchasing value being low, and most of them are less than one dollar.
Muhammad told Enab Baladi that if small coins (cents) of the dollar were available, it might have been possible to deal with them, but with this decision, merchants will be forced to buy vegetables from farmers in dollars and sell them to customers in Turkish lira, and with every fluctuation of the lira they will be threatened with loss.
Mustafa al-Zeer, a sales broker in the “Al-Hal” market, told Enab Baladi that the decision can be applied to seasonal commodities such as olives and potatoes, for example, because it has merchants who ship in large quantities, and the payment is made following a period that may reach up to a month. And fruits in retail, dealing in Turkish lira is better in terms of the availability of coins, and because goods are sold to the consumer in lira as well.
Since the issuance of the decision, the people in Idlib have been afraid of the high prices of vegetables and fruits affected by the decision, according to the fluctuations in the exchange rate of the dollar once morest the Turkish lira.
Abd al-Majid al-Muhammad, a resident of the city of Idlib, refused to buy a bag of onions from one of the stores in the “Al-Hal” market, following he found that its price was registered in dollars, explaining that the seller would multiply the value of the commodity by the highest exchange rate in order to avoid loss, which would raise the price of the goods, and this pushes the people to reduce them. or dispense with it.
Pricing does not deal
Mustafa al-Akoush, the financial director and deputy administrative director of the “General Institution for Monetary Management” in Idlib, told Enab Baladi that all shops and professions in the region deal mainly in US dollars, even without an official decision. This trend has recently appeared clearly due to the fluctuation in the value of the Turkish lira. Officially approved to deal.
Al-Akoush explained that any commodity will be sold on credit, the price of which will be fixed in dollars, due to changes in the Turkish currency, to ensure that traders do not lose.
And because the issue is only related to pricing in dollars and not to cash dealings with it, Al-Akoush considered that there is no objection related to the banking environment from this dealing.
The banking system is “modest”
There are many countries that relied on the dollar in daily transactions in addition to national currencies, such as Lebanon and Iraq, and the experience in both countries succeeded as a result of several reasons, including the existence of stable income from the dollar, according to what was explained by the researcher in political economy, Dr. Yahya Al-Sayed Omar.
Mr. Omar explained, in an interview with Enab Baladi, that Iraq has oil revenues estimated at billions of dollars, and Lebanon relied on revenues from tourism, banking services and expatriate remittances, pointing out that the success of any experiment, in general, is linked to the presence of several factors.
Regarding the decision to price vegetables in dollars in Idlib, the researcher believes that the decision is good in theory, as it actually protects farmers and consumers from losses resulting from fluctuations in the value of the lira. It also limits unjustified profits made by the exchange sector, and reflects stability in the market.
But in practice, the decision is ineffective for several reasons, the first of which is that the banking system in the region is modest and simple, and does not support the freedom of currency exchange, especially the dollar, and the daily exchange needs small denominations of dollars, such as parts of the dollar, dollar paper and other small monetary denominations. This is not available, as the majority of existing denominations are $100 and $50, according to Mr. Omar.
The researcher emphasized that the total amount of dollars in the region does not support its imposition as a daily trading currency, as it is not sufficient for the minimum.
According to the current data, the transfer of the decision to other sectors is unlikely, as it is expected to remain in the “Al-Hal” market, and even at this level, the decision will witness slackness in its implementation, due to the lack of sufficient elements for its continued adoption, according to Dr. Yahya Al-Sayed Omar.
The “Salvation Government” and the “Syrian Interim” government, operating in northern Syria, adopted the Turkish lira as a currency for circulation in June 2020, as it is more stable than the Syrian pound, in addition to the circulation of the US dollar in foreign commercial transactions.
The replacement of the Turkish currency with the Syrian one in northern Syria came following the exchange rate reached the limits of 3,500 Syrian pounds to one dollar in June 2020, amid Syrians’ demands that the exchange be a temporary solution until a political solution is reached.
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