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The Fall of the Lebanese Lira: The New Venezuela?

Tuesday, the Lebanese pound fell in parallel (black) market transactions, to an unprecedented record level of 100,000 pounds per one US dollar, with the continuation of the monetary, financial, economic and political crises in the country. This record level was observed at a time when banks resumed an open-ended strike on Tuesday in protest against a series of judicial rulings that banks see as threatening to destroy the remnants of their liquidity, while the state stands helpless and confused. Those judicial rulings were represented by the news that a judge in Beirut issued. The decision was regarding requiring Bank Med to pay $210,000 in cash to one of its depositors, under the bank's seal with red wax, a decision that the Association of Banks in Lebanon considered arbitrary. The official exchange rate was set at 15,000 pounds against the dollar last February.

In this context, the newspaper An-Nahar learned that consultations took place yesterday to pave the way for an agreement to end the strike, with the endeavor of Caretaker Prime Minister Najib Mikati. However, the contacts did not reach a consensus, and the decision was kept pending until Wednesday's meeting of the Association of Banks. The Secretary-General of the Association of Banks, Fadi Khalaf, told An-Nahar that the banks' strike « does not aim to paralyze the country. And it facilitates the processes of opening credits for import and export for companies in general. As for banking, the matter is related to the Governor of the Banque du Liban, who suspended its business as long as the sector continues to strike, noting that there is no objection to banks looking for a way or a procedure to facilitate banking matters in the event that the ruler retracts his decision. »

Dr. Nassib Ghobril, chief economist at the Byblos Bank Group, told Sky News Arabia that the parallel market, or what is known as the black market, appeared in the fall of 2019 as a result of the scarcity of liquidity in foreign currencies in the Lebanese economy. This was a result of the sharp decline in the flow of capital into Lebanon, which was caused by the crisis of confidence that began to appear in late 2017 and gradually expanded until it exploded in late 2019.

Ghobril added that Lebanon suffers from the problem of irregular political work and lack of respect for constitutional deadlines. The country is currently without a president, while the present government is a caretaker government due to the obstruction that occurred in the process of forming a new government in May 2022.  Therefore all these matters created a vacuum that allowed speculators to manipulate the exchange rate.

Newspaper Al Diyar wrote « Economic analysts gather information on the difficulty of the stage in the coming months, and the high suffering of people after the “dollarization” of prices in the sectors of fuel, medicine, flour, electricity generators, food and hospital materials, and all the necessities of life, and this led to a decrease in the purchasing power of citizens, which was reflected in consumption Fuel at a rate of 100,000 plates per day, and a decline in admission rates to hospitals, visits to doctors, purchase of medicines, food supplies, clothes, restaurants, and taxis. The strike of public sector employees also contributed to the paralysis of all institutions, and the strikes reached teachers of private schools and large companies that resort daily to exchange operations. right of employees. »

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