In his October Globe Asia article, Professor Steve Hanke, Professor of Applied Economics at the Johns Hopkins University, Baltimore, Maryland, describes the consequences of a protracted civil war, such as Syria’s, for its economy; high inflation and the erosion of capital assets. As there are no reliable figures available for measuring the rate of inflation, Professor Hanke derives the implied rate of inflation from the Syrian pound/US$ black-market exchange rate. As he explains:
“The black-market exchange rate is a free-market price, and one that captures open inflation. Indeed, by evaluating changes in the black-market exchange rate, we can determine the implied inflation rate in Syria. This is an accurate, objective measure of open inflation. At present, Syria’s inflation rate sits at a whopping 193% (see the accompanying chart).
Yes, to gauge the true inflation rate, as well as Syrian’s sentiment and economic expectations, there is no better weather vane than the black-market Syrian pound / U.S. dollar exchange rate.”
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