With growing talk of monetary policy shifts in Syria, the country’s central bank governor, Abdelkader Husrieh, recently announced that Syria is moving towards adopting a managed float system for its local currency, the Syrian pound. This comes after efforts to unify the multiple exchange rates that have long distorted the market.
But what does a managed float actually mean in the Syrian context? And can it realistically stabilize the pound or ease daily life for ordinary Syrians caught in an economic freefall?
What is a managed float?
In simple terms, a managed float allows a currency’s exchange rate to be shaped mainly by market forces – supply and demand – but gives the central bank the right to step in when needed. That intervention aims to prevent wild swings, excessive speculation, or sudden shocks by buying or selling foreign currency reserves.
Governor Husrieh told the Financial Times that this approach is designed to limit the role of informal money changers who, for years, have operated outside official channels – often earning hefty profits of around 40 cents on every dollar entering Syria. The plan also aims to channel all foreign trade through official banking networks.
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Why is Syria considering this now?
In theory, moving to a managed float could help the Syrian government regain some control over its battered currency and reduce the black market’s grip on the economy.
Economic consultant and head of the Syrian Renaissance Council, Amer Al-Deeb, told +963 that a managed float strikes a balance between letting the market work and shielding the economy from destructive volatility. “It allows the government to keep a level of control without an unrealistic fixed rate and reassures investors that the central bank can intervene when needed,” Al-Deeb explains.
Economic researcher Khorshid Alika agrees. He says a managed float could help stabilize the exchange rate, make Syrian exports more competitive, and absorb economic shocks; as long as the central bank has enough foreign reserves to intervene effectively.
A good idea in theory – but can it work in practice?
Alika points out that the success of a managed float depends on several key conditions: “the central bank’s ability to intervene effectively when needed, having enough foreign currency reserves, consistent monetary and fiscal policies to keep the exchange rate stable, and, above all, a relatively stable economic environment.”
Looking at Syria today, Alika makes it clear that these conditions simply aren’t fully in place. He warns that deep structural imbalances and repeated economic shocks have left the Syrian economy especially vulnerable to sharp swings in the pound’s value. On top of that, trust in the country’s monetary institutions remains limited – and there’s no transparent or reliable official exchange platform that people can depend on.
Amer Al-Deeb, head of the Syrian Renaissance Council, agrees that, at least on paper, a managed float could be the best of Syria’s limited options. But he echoes Alika’s concerns: “the country’s weak foreign reserves, lack of trust in the central bank and government decisions, and its limited exports, which are vital for bringing in fresh dollars, all make this plan very hard to pull off.”
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There’s more working against it, too. According to Al-Deeb, the lack of transparency in how the exchange market is run, the spread of an underground economy and informal remittance networks, and the fact that monetary policy is often tied to non-economic political decisions; all these factors make the task even tougher. Corruption and smuggling have only made things worse, draining hard currency out of the formal banking system, partly because, in recent months, the central bank stepped back from actively defending the pound on the parallel market.
The result, Alika says, is that huge amounts of dollars and euros have slipped through official channels unchecked. He argues this could have been prevented if the central bank had played a stronger role sooner, using market-driven tools to keep those flows under control.
Both experts agree that for any managed float to have a real shot in Syria, a few conditions are non-negotiable. As Al-Deeb puts it: “the government must get a handle on the chaos in the parallel currency market, equip the central bank with flexible tools to intervene when needed, and encourage Syrians abroad to send money through official banks, which only works if the official exchange rate is realistic and close to the street rate. Closing the gap between the official and black-market rates is key.”
Potential upsides and real risks
If implemented well, a managed float could help stabilize the pound’s value, shrink the black market, curb inflation, attract investment, and limit money laundering.
However, both Al-Deeb and Alika warn that if the central bank fails to intervene effectively, or uses the system for short-term political aims, it could backfire badly. An underfunded or poorly timed float might actually increase volatility, fuel inflation, and drain already scarce reserves.
In short, while a managed float could be a step in the right direction for Syria’s struggling currency, its success depends on whether the central bank has the tools, and political independence, to manage it well. Without that, Syrians could see more economic turbulence rather than less.
