From £ 2,000 to £ 8,400 … the path of the dollar’s rise in 2020 Will it continue in 2021?

The dollar exchange rate has been a constant concern and daily obsession for all Lebanese over the past year, and one of the most widely read of all news topics. It rises and falls according to economic and political conditions, and according to a complex and diverse input mechanism. More than one player entered the exchange rate establishment line, the last of which was smartphone applications.

For a whole year, or just over a year, the exchange rate witnessed many fluctuations. We count them and list their causes in a broad “picture” with the dawn of 2020, which was full of economic, security and political evils and calamities alike.

About a month after the October 17, 2019 revolution, the dollar exchange rate ranged between 2,000 and 2,400 Lebanese pounds per dollar. At that time, “WhatsApp” text messages had a significant impact on the market price by spreading rumors. However, the price at that time was already subject to the “supply and demand” process, and the Banque du Liban was still able to meet its financial obligations, especially the maturity of the Eurobonds, and that was before the Lebanese government announced Lebanon’s inability to pay, recklessly.

January: 2150 lire

In mid-December 2019, Riad Salameh appeared to the Lebanese to say that “banks are not obliged to pay their depositors’ money in dollars but in Lebanese pounds.” At the time, it seemed as if it was a road map or a drawn “instruction” that the banks had seized, and the series of “looting” deposits began.

The aim of this saying was to create an artificial demand for the Lebanese pound, since the margin of difference between the official price and the market price was not very large and the discussion about Haircut was still in its infancy. At the time, Salameh also hinted at the possibility of reviewing the number of banks operating in Lebanon, which heralded the opening of the door to large-scale mergers that could cut their number to less than half. But this talk was kept within the context of the track and did not see the light until this moment.

February: 2,500 pounds

In mid-February, the exchange rate reached 2,500 Lebanese pounds. That stage was full of accusing the Banque du Liban of abandoning its functions, and replacing it with the authority of the judiciary and the security services over the money changers who violated the rate imposed on them and exceeded the rate of up to 30%. official change, under penalty of writing a report of seizure, withdrawal of license or imprisonment for offenders.

March: 2,650 pounds

That stage also (the month of March) witnessed the bombing of the “Capital Control” bill. The Speaker of Parliament hit Nabih Berri on the chest and said: “He will not approve”, under the pretext of protecting depositors. It later turned out that the bombing of the project was to protect the banks and not the depositors, just as their bombing contributed to the evaporation of money.

April: 3,850 pounds

April was the month of the circulars that the Central Bank of Lebanon spread like rice over the heads of banks and customers. Circular No. 547 was born to grant loans to troubled clients and help them pay workers’ salaries and operating expenses at institutions, but very few benefited from it. Then Circular No. 148 on the payment of funds to depositors under $ 3,000, with the condition of closing the accounts. The plan was to get rid of the small depositors, “the galabi headache”, which caused the crises at the doors of verified banks on social media pages.

Regarding the other circular, No. 149 was carried out, which stipulated the establishment of a special unit in the Directorate of Monetary Operations, which handles currency trading “according to market price”, and also undertakes to “establish an electronic platform” whose launch was delayed for several months. This platform was a severe test for the Banque du Liban, through which it was unable to demonstrate its ability to inject dollars into the market. The actual launch was also done to create 3 exchange rates: the official price, the platform price, and the black market price. At that stage, the circulation of the dollar had begun to circulate in the orbit of 3000 pounds per dollar and more on the black market.

The month of April witnessed many events related to the dollar, in the midst of it, the Central Bank of Lebanon issued its famous decision, which decided to pay transfers abroad of companies in national currency. This decision generated a crisis in the remittance market and reduced its size to a minimum due to the difference between the price of the platform, which was set at 2,600 pounds, and the market price of close to 3,850 pounds.

May: 4,500 lire

Also at the end of this month, the Banque du Liban forced depositors to withdraw their dollars from the banks at the platform price, and that was the beginning of our entry into the Masked Haircut Tunnel, where the exchange rate touched In early May, the 4,000-pound threshold, then gradually began to rise to less than 5,000 throughout the month of May. The first time the exchange rate reached 5,000 was in June.

June: quickly over 5,000 pounds

June was the month in which the Syrian pound crisis was linked to the Lebanese pound. The Syrian actor entered the dollar buying line in the Lebanese market and the exchange movement was intensely active in the areas close to the border. Simultaneously, the Syrian pound saw its exchange rate plummet, just as the dollar registered for the first time in June the figure of 5,000 pounds. Applications were launched on smartphones that later succeeded in repealing the “supply and demand” law, and later imposed itself on the scene as an entity capable of determining the price of the “black market” according to the whims of its operators and without any clear justification. or market conditions, all because people are greatly affected by it. very.

Also during this month, the Banque du Liban entered the exchangers’ extension line “A” in dollars (300 thousand dollars a day) to finance imports and pay the salaries of foreign employees and ordinary citizens at a rate of 200 dollars a month per person. , and was interpreted at the time as a “gift” from the Banque du Liban to the public “Hezbollah” due to the increase in the smuggling of subsidized goods, including those derived from oil, to Syria.

July: LBP 9,000 (the highest number)

The month of July witnessed the highest level of the dollar exchange rate during 2020. The dollar exchange reached the threshold of 9,000 pounds due to the desire of people to withdraw their money from banks at the price of the platform , then buy dollars on the “black market”, and this is what forced the Central Bank to print Lebanese “banknotes”. And sent, and “Asas” was the first to reveal this new data.

August: 7000 lire

As for the explosion in the port at the beginning of August, the exchange rate decreased with the beginning of the influx of in-kind and financial aid. During that period, the exchange rate fell to the limits of 7,000 Lebanese pounds or less, and there was increasing talk of stopping the support approved by the Banque du Liban at the end of 2019. Talk of stopping the subsidy is for two reasons : the beginning of the shortage of the Central Bank’s foreign exchange reserves and the depletion of this reserve through smuggling. Fuel, flour and other subsidized goods in Syrian territory and smuggling of other goods such as food and medicine to several Arab countries.

September: 6,600 pounds

During the month of September and October (anniversary of the revolution), the Banque du Liban realized the danger of pumping this enormous amount of pounds into the market, so it resorted to a policy of “suffocation” by forcing importers to deposit Lebanese money “in cash” in their bank accounts, to agree to sell them subsidized dollars. . They also “legalized” the same bank withdrawals in Lebanese pounds.

This policy was able to cap the exchange rate and reduce it from 8,600 to about 6,600, that is, up to 2,000 pounds in a month, but not for long.

October: 7,500 lire

The exchange rate rose again as we entered the winding tunnel of government, and the economy and money became entwined with politicians, especially tight personal accounts.

November and December: 8000 ~ 8500 lira

The talk about US sanctions returned, and then we entered a phase of waiting for the “handover and handover” of the presidency in the United States, the entrance of Joe Biden into the White House and the bets that came with all that on the stalled and postponed “French initiative”. All this led to launching the crises next year, which seems more and more burdened than its predecessors with more and more crises … So hold on and fasten your seat belts, oh Lebanese.

Emad Al-Chidiac – Medium Handles