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Did the Lebanese pound hit bottom, when yesterday the dollar exchange rate on the black market reached 10,000 pounds? Can it be said that by breaking a new record, things got out of hand, the ceilings were no longer in place, and all possibilities are possible? Or is there still hope of going back to the maximum limits?
Yesterday, the Lebanese pound broke the record that it reached on July 3, when the price of the dollar in the parallel market reached 9,900 pounds, and yesterday the sale price was recorded at 10,000 pounds and the purchase price of the dollar was 9950 lbs. . There is no doubt that breaking the 10,000 barrier can pave the way for a further collapse of the pound. All the previously talked about expectations of 17 thousand to the dollar and 22 thousand may be correct with him, leading to the expectations of the “Bank of America” to register 50 thousand pounds for one dollar. Will the Lebanese again adapt to a new level of poverty, in which the minimum wage has become $ 68 and the median wage is $ 120? Or is it time to move on and rebel against the bitter reality we live in, especially since the decline in the value of the local currency will be reflected in a further rise in the prices of goods and materials? Food?
In the context, the financial advisor Michel Qazah believes that the arrival of the dollar against the pound at 10,000 pounds has a psychological reflection that may push some of the owners of the dollar to sell it, with the background that this is their ceiling or its limits, but in reality this is not the final ceiling of the dollar exchange rate. And he considered that the controls imposed by the Banque du Liban and the banks on depositors through the establishment of the withdrawal ceiling, or what is known as Capital Control, contributed to calm the market, as evidenced by the fact that once Capital Control is withdrawn from the bank accounts in LBP, or even from the price of 3900 LBP, depositors will flock to withdraw their deposits and buy The dollar belongs to the exchangers, and then what “Bank of America” has predicted that the exchange rate will reach 50 thousand pounds.
Why is the lyre deteriorating?
In response to a question from Al-Gomhoria, Qazah attributed the rise in the price of the dollar to several reasons, the most prominent of which is the resort of some banks to withdraw dollars from the market in order to create liquidity at a rate of 3 % in correspondent banks, as evidenced by the fact that some banks offered to give bank checks in Lebanese pounds at a discount of 10 to 12% of their price, if the amount is insured for her in lira in cash, and she points use cash to buy dollars from money changers. Likewise, since 2020, some banks have resorted to the sale of bank checks in dollars with discounts, in order to be able to fortify themselves cautiously, before reaching this stage, while some banks, about two weeks ago, resorted to adopting this step because they were betting on extending the effect of circular 154.
Qazah estimated the mass of cash that was withdrawn from the market in the last two months and used for the purpose of implementing Circular 154 at around $ 1 billion. He said: “These funds are no longer present today in the core of the Lebanese economy, because they were actually delivered to correspondent banks outside of Lebanon, and the worst thing is that these dollar bank checks that were sold will be withdrawn from banks in the rate of 3900 pounds, and will result in a higher demand for dollars in exchange houses, which will lead to an increase in its price again in the next period. Based on the volume of financial transfers entering Lebanon, estimated at about $ 500 million per month, we may need about two months for the market to regain its equilibrium and cover the dollar shortage caused by banks through the implementation of Circular 154 ».
Qazah said that the rise in the dollar today is not innocent, as there are many questions posed to the governor, among them, how does the reserve decrease by 10 billion dollars while the cost of support did not exceed 5 billion dollars? Where did the difference in funds go? Is the ruler interfering in the black market through money changers, providing them with dollars to calm the market, and when he refuses to do so, the exchange rate deteriorates, or are these billions used to smuggle money from politicians to the Exterior?
Fixed price?
Qazah claims that after the difference between the market dollar and the bank’s dollar became large, the Central Bank is obliged to change the price of the platform, or 3,900 pounds if it wants to avoid a popular revolution led by depositors. As for not changing the price, it may be aimed at increasing popular pressure to accelerate the formation of the government. He said: “It is imperative to wait for the step that the Bank of Lebanon will take in this regard in the next stage, but if the Central Bank raises this price, we will have a mass of cash in the lira greater than the current one, and therefore it is difficult to remove it. of the market, and will translate into high prices and further deterioration, in the exchange rate, and so on.
On the other hand, Kozah emphasized that the only solution to stop the collapse begins with forming a government of specialists and moving forward with a roadmap that begins with negotiations with the IMF. Today we have reached the stage of no return, and everyone is forced to sacrifice to reach, at a future stage, the price of a pound against the dollar between 6000 and 7000 pounds. As for finding a solution to people’s deposits in banks, it will not be possible without bank owners and large depositors bearing the losses.
The march of degradation
A year and a half after the start of the deterioration in the price of the lira, the political class did not take any step to stop the collapse, but rather observed it, obstructed the economic plan and Capital Control, and recovered the stolen money. . In this context, the scene of the collapse of the lyre after the explosion of the Port of Beirut was illustrated as follows:
With the price of the lira reaching around 9,900 pounds during July 2020, the price returned and fell after the explosion to about 7,000 pounds, then 6,500 pounds, with the arrival of some financial aid to Lebanon.
However, the pound resumed its decline from December 2020, registering 8,000 pounds, then around 8,600 pounds in January, and 9,000 pounds during February, and rose from mid-February to 9,500 after demand for the dollar increased.
