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Khaled Abu Shakra wrote in “Nidaa Al Watan”:
Illusions hide the “elephant” of the collapsed economy, behind the “finger” of the electronic platforms that determine the dollar exchange rate on the black market. Blaming an “unknown” for the collapse of the lyre carries less weight than blaming a “known” perpetrator. The accusation of the rise of the dollar in “speculation” raises hopes that the problem is immediate and the Lebanese pound is “injured”, and that it will recover its value as soon as these strange phenomena cease.
Frankly avoiding with public opinion that the Lebanese economy has lost all elements of its resistance is not the problem. Rather, the officials believed this “lie” and bet that the tools they used over the past decades are still valid in pulling Lebanon out of its ordeal. As long as this mindset continues, the dollar will keep flying and you won’t be deterred by a platform shutdown from here or another chase from there.
The lyre shouts: “My health is wonderful.”
The rise in the dollar exchange rate in recent days has once again raised many questions about the causes and the path it may take in the future. Cashiers attribute reason to electronic requests. The price set for these platforms is spreading like wildfire and increasing the price across the country. Sources of some of them place the dollar in a matter of days from 9 thousand pounds to 11 thousand in the framework of speculation on the pound, and this may be true, and “but no country in economic recovery can speculate just to sink its currency national and lead to its collapse ”. The Secretary General of the Arab Federation of Stock Exchanges, Dr. Fadi Khalaf. “Speculation works with weaknesses and what is the majority for us.” In his opinion, “the lyre applies the saying of the poet Abu Nawas:“ I was wondering about my illness, my health is wonderful ”. In the sense that the strength of the Lebanese pound in these circumstances is what raises surprising more than its weakness. The Lebanese economy has never been built on real and effective production pillars. Today we are paying a price. These policies.
Speculation
The idea of currency speculation requires buying at a low exchange rate, then working to increase it to achieve a profit margin, and then lower it to buy again … and so on. Therefore, the duration of these operations is short. While the general trend that the dollar will take in the coming days is bullish. As “the pound reflects the state of the collapsed economy, only,” according to Khalaf.
Since the end of last year 2019, Lebanon has lost two of the three main sources that ensure strong currency flows. Direct and indirect foreign investments have ceased to exist, service sector revenues have declined by more than 80 percent, leaving only expatriate remittances, which were estimated at $ 7 billion, and some material foreign aid to non-profit organizations. governmental. In contrast, the balance of payments registered a deficit of $ 10.5 billion in 2020. This means that the net funds that left Lebanon exceeded those that entered Lebanon by 10.5 billion. In addition to the fact that this number is more than double what we expect from International Monetary Fund loans, it is considered a precedent that Lebanon did not witness during the days of open import and the record of the trade balance deficit of around 17 trillion dollars.
political status
Many citizens are betting on a lower dollar as soon as the government is formed. In the end, some of those who store an amount of dollars deliberately sold it when it crossed the 10,000 pound threshold, thinking that this is their “ceiling”, and that they can buy an amount greater than the dollar when the exchange rate drops. . This process, which during the last period contributed to the supply of the dollar, seems to stop with the latter breaking the psychological barrier and its upward trend, which will further drive its rise. As for the commitment to form a government due to the drop in the exchange rate, it is out of place for several reasons, according to Khalaf, the most important are: “If the government is born, rumors will spread about its low price, which leads to exhibiting it in large quantities, so speculators will buy it and it will soon rise again after a few days. The future government will have the responsibility to resume negotiations with the International Monetary Fund, and apart from that the expected loans from the Fund will not exceed 4 billion dollars in installments in several years, one of the most important parallel reforms that will be required will be the liberalization of the exchange rate and the lifting of subsidies. Dollar ”.
2023 is the most difficult
All mathematical estimates confirm that the next direction of the dollar price will be up. And this year’s prices are just the introduction to much larger jumps expected to be witnessed by the dollar in the next few years, and “specifically in the year 2023,” according to Khalaf, “in this year, the currency reserves of the BDL they have been completely exhausted. No matter how hard they try to preserve them. Encouragement rationalizing support and many other measures, the urgent need will push them to use them. This is in regards to the monetary aspect. Regarding the political aspect, “the expectation that a president of the republic will not be agreed at the end of the current era in October 2022, will transfer the Council of Ministers by virtue of business conduct and lose the ability to make fateful decisions The most important of which is the appointment of a new governor for the Bank of Lebanon, whose term ends in 2023, ”continues Khalaf. “As for the biggest disaster of this year, it is that there will be an expired House of Representatives after the impossibility of holding elections next year. These factors combined will be disastrous for the political and economic situation, and therefore the monetary situation.” Then the country would have fallen virtually, not theoretically, into the unknown. Which prompts us to take pity on the 11,000-pound price against the dollar.
The blocked horizon is one of the most important factors affecting the exchange rate. Fear of the future and lack of confidence in the political class to make the right decisions that serve the country, increase the demand for dollars and prevent citizens from spending what they have. On this basis, the demand for the dollar continues to rise and the supply to fall and fall, which will inevitably lead to the continued collapse of the exchange rate and the absence of a real ceiling for what the price of the dollar can reach.
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