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In the closing months of last year, the crisis in Lebanon erupted with all its ramifications, economic, financial and monetary. The spark of the October 17, 2019 revolution was sparked by the decision of the Ministry of Communications to impose a tax on social media applications, including WhatsApp.
Several factors combined, including the dollar shortage crisis, the gradual drop in the price of the lira, and the launch of the revolution, which led depositors to rush to withdraw their deposits from banks, especially after it was revealed that Huge deposits were transferred abroad in the months leading up to October 17. The banks closed their doors for two consecutive weeks, under the pretext of avoiding acts of sabotage during the revolution.
The closure of the banks, the chaos that accompanied it and the resignation of the Saad Hariri government under pressure from the street in late October 2019, and the emergence of the black market for dollars pushed the lira to continue falling. During the months of November and December 2019, it ranged from 1,700 to 2,000 pounds. The Lebanese pound ended its final year at 2,100 pounds to the dollar.
Lira’s shifts
There are many events and situations that have passed through the country from one year to today, which had a common denominator among them, which is the collapse of the Lebanese economy, and with it the Lebanese pound, which reached dangerous levels during 2020 in which the price of the dollar exceeded 10,000 Lebanese pounds for the first time in Lebanese history.
Here are the most prominent seasons of the Lebanese pound for the year 2020:
The year 2020 began with a government vacuum and chaos on the streets, and within the banking sector, the black market and consumer markets, with the signs of the dollar shortage clearly visible. The price of the dollar rose in January, the first month of the year, to more than 2,100 pounds. And it came to around 2,500 pounds, before the formation of a new government led by Hassan Diab.
In February 2020, Lebanon and the world began to suffer from the Corona virus, Covid 19, entering a phase of almost complete closure, disruption of economic activity, public life, institutions, the education sector and others, and the dollar calmed down from its rush to register slight falls against the lira.
The dollar lull that ended last February did not last. In March 2020, the dollar took off again, with incredible speed, especially after Lebanon officially announced that it had not paid the Eurobonds owed for this for the first time and the price of the dollar exceeded 2,750 pounds.
The dollar continued to rise and the pound continued to decline in April 2020, surpassing the 3,000 lira threshold, and in some days it reached 3,800 and 3,850 liras, while the most prominent event was with the banks. In April 2020, the Association of Banks began to adopt an exchange rate of 2,600 pounds per dollar, while dealing with small depositors, in line with the Banque du Liban circular, in which it recommended that holders of Deposits that do not exceed $ 3000 or 5 million Lebanese pounds will withdraw their money according to the exchange rate of the platform. Electronic (not yet released), which banks have set at 2,600 pounds.
In May, the dollar rose to more than 4,000 pounds and close to 4,500 pounds in the second half of May, especially after the Banque du Liban imposed on financial transfer institutions (OMT and others) to deliver remittances according to the Directorate of Operations of Cash at 3,200 Lebanese pounds per dollar, provided it is updated daily. But this measure was short-lived.
As for the month of June, the dollar broke the 5,000 pound barrier, registering large and very fast increases, suggesting that the market is completely flat. At that time, the regular exchange houses had begun to price the dollar against the pound within a sliding range of between 3,850 pounds as a minimum purchase and 3,900 pounds as a maximum sale. The Banque du Liban’s Monetary Operations Directorate set the dollar exchange rate after payment of remittances received from outside Lebanon at 3,800 Lebanese pounds.
Total collapse
The peak of the exchange rate of the dollar against the lira reached in July 2020, when one dollar surpassed 10,000 pounds, setting a record, the highest in the trip of the collapse of the lira. At the time, prices of consumer goods rose frantically, and Lebanese regions witnessed popular movements and roadblocks in protest at the rise in the exchange rate of the dollar against the pound.
The dollar did not last long at its record highs, declining significantly after the Diab government resigned in August 2020, less than a week after the explosion at the Beirut port killed hundreds, injured thousands and destroyed. half of the capital, Beirut. The dollar gradually fell back to around 7,500 pounds and 8,000 pounds.
As for the month of September, they began to talk seriously about the lifting of subsidies for the importation of basic materials, after the shortage of foreign exchange reserves in the Central Bank. The markets became a great black market, in which all products were traded and monopolized and stored by companies, traders and importers. Medicines became scarce and Lebanese regions became accustomed to queuing from time to time for gas stations, bakeries and subsidized food, while the dollar continued in September at around 8,000 pounds.
In the month of October and November, the dollar entered the black market at near-close levels of less than 8,000 pounds, then retreated to the neighborhood of 7,300 pounds, before gradually climbing in the month of November, reaching 8,500 pounds maximum. . It continues rotating within the same levels during the last month of the year 2020, the month of December. But the most prominent thing that was controlling the black market in the last three months and manipulating the exchange rate were the electronic applications, large traders and money changers, who seemed to work with knowledge and perhaps with the consent of the Banque du Liban and the supervisory authorities , given the inability of the judiciary to prosecute any of them.
The year 2020 ends with three semi-official exchange rates for the pound, which are 1507 pounds per dollar, the official rate approved by the Central Bank. And 3900 lira is the rate approved in banks for withdrawals of deposits in dollars. And 8,300 lira approved today on the black market. As for the next year 2021, the State policies, which are absent and absent from any attempt at economic reform.
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