POST Online Media Lite Edition


U.S. dollar to be untied from Lebanon's economy

Christian Fernsby |
The governor of the Central Bank of Lebanon, Riad Salameh, announced the untying of the national currency from the dollar and its value would now depend on an agreement with the International Monetary Fund.

Article continues below

Topics: U.S.    LEBANON   

Salameh thus revealed a rupture of the economic relationship dating from 1997 through which the Lebanese pound maintained an equalization with the US banknote.

At present, there is a depreciation of 80 percent of the national currency with respect to the U.S. currency, which will increase while the government is not installed. According to the bank executive, the worst crisis in decades will worsen if an Executive is not formed urgently to implement structural reforms, after which financial aid promised by the international community will flow.

The scarcity of dollars in the market led to the closure of operations in banks in that currency.

Thus, savers, even if their deposits were in foreign currency, could not touch the greenbacks and if anything, they could extract them in Lebanese pounds at the official rate of one per 1,500, while the exchange used another rate.

Currently, the Central Bank maintains a rate of 1,500 Lebanese pounds per dollar and on the black market it is trading at an average of 8,400.

As foreign exchange was required for wholesale or retail purchases, merchants passed on the cost of their merchandise to customers, who saw their purchasing power decline to miserable levels.

To all this must be added a foreign debt of over 90 billion dollars, 170 percent of the gross domestic product, unemployment at almost 30 out of 100 Lebanese and the Covid-19 pandemic that causes a notorious paralysis of economic activity.

What to read next

Lebanon risk profile rising sharply
Faster deterioration in business conditions during May in Lebanon
Lebanon’s draft budget insufficient to slash country’s debts