Lebanese currency collapsing at record speed

Lebanese pound banknotes are seen at a currency exchange shop in Beirut, Lebanon. (REUTERS)
Lebanese pound banknotes are seen at a currency exchange shop in Beirut, Lebanon. (REUTERS)
Short Url
Updated 21 March 2023

Lebanese currency collapsing at record speed

Lebanese pound banknotes are seen at a currency exchange shop in Beirut, Lebanon. (REUTERS)
  • Exchange rate has dropped around 300 percent since the beginning of the year

BEIRUT: The Lebanese pound depreciated at record speed, reaching 143,000 pounds to the US dollar on Tuesday afternoon, after dropping 20,000 pounds in under 24 hours.

Hundreds of people took to the streets to protest in Beirut, Tripoli and the Bekaa Valley, blocking roads and burning tires.

Several gas stations, supermarkets, and pharmacies suspended their services for the day while protesters forcibly shut down shops in the capital’s popular Mazraa Corniche area.

One protester near the Jamal Abdel Nasser Mosque in Beirut spoke out against the country’s politicians and people manipulating the exchange rate on the black market, asking “is this how they want us to welcome the month of Ramadan? Where are the MPs? What are they doing about this? What did we do to deserve their corruption?”

The angry protests came a day after Lebanon was ranked the second-least happy country in the world behind Afghanistan,in the World Happiness Report 2023.

The report, issued annually under the supervision of the UN, includes six main factors: GDP per capita, social support, healthy life expectancy, freedom, generosity, and low corruption.

The Lebanese pound’s exchange rate to the dollar has so far dropped by about 300 percent since the beginning of this year.

The latest drop resulted in unprecedented chaos in the markets, in a country where all products are priced in dollars, purchasing power is degrading and the average public sector monthly wage now equates to around $150 a month.

Economic analyst Mounir Younes said: “The exchange rate dropped 30 percent in just 10 days. There is no way to curb this collapse without curbing imports since the gap between the money allocated for imports and the quantities available in the local market has become deep in light of the Central Bank’s reluctance to back it up using its depleting reserves.”

As the local currency continued to drop on the black markets, while banks resumed their strike and political stalemate prevailed, citizens have been randomly taking to the streets to protest anything and everything.

A security source feared that the situation could implode at any moment.

Fuel distributors decided to give the state until Wednesday morning to make a decision to dollarize fuel prices. Their representative, Fadi Abu Shakra, told Arab News: “The distributor or station owner cannot bear the difference between the price list set by the Ministry of Energy — even though it is adjusted over three times a day — and the ever-changing exchange rate. If no decision is taken, we will dollarize our prices by ourselves.”

On Tuesday, the price of a 20-liter canister of gasoline reached 2,390,000 Lebanese pounds, an increase of 168,000 pounds over Monday’s price.

The Lebanese Pharmacists Syndicate decided to close pharmacies since pharmaceutical companies and warehouses stopped delivering medicines to them more than two weeks ago.

“We are in a comprehensive collapse. The health sector is affected the most, which directly affects patients,” said the head of the Pharmacists Syndicate, Joe Salloum.

MP Michel Daher accused the Banque du Liban of intervening in the market whenever it wants to cover the state’s expenses. “The people are hungry and are no longer able to bear the disastrous results of financing your patchwork approach.”

MP Ashraf Rifi said: “We are quickly slipping into more dangerous stages, while the mafia, the alliance of arms and corruption, is reassured of the illusion that the Lebanese have been domesticated. The volcano will eventually erupt. We can no longer afford to keep corrupt in charge; statemen must be chosen to bear the responsibility of the rescue plan.”

The head of the General Labor Union, Beshara Al-Asmar, stated: “We need to organize a comprehensive strike since officials have shown no intention to address the insane drop in the exchange rate and the resulting price hikes of commodities, foodstuffs, fuel, etc.”

Al-Asmar added: “The situation is unbearable. Officials must open up to each other. The entire region, including Tukiye and Iran, has turned into a region of dialogue, openness, and political solutions.”

Later on Tuesday, the BdL announced that it will be conducting an “open and continuous process to buy Lebanese banknotes and sell dollars for cash based on Sayrafa’s exchange rate,” which was set at 90,000 pounds to the dollar as of Tuesday.

Following the central bank’s announcement, the local currency regained some value on the black market as the exchange rate rose back to 100,000 pounds to the dollar, settling at 116,000 pounds to the dollar as of 5:30 p.m. local time.