Despite the weekend, the Lebanese pound continues to collapse against the dollar on the black market. The exchange rate thus reaches 17,300 LL / USD for buying and 17,400 LL / USD for selling.
This collapse, if it occurs during the weekend, which is usual at the base, is of a scale hitherto unknown. The Lebanese Pound is thus at its lowest level against the greenback, after having successively exceeded the various symbolic prices without encountering any resistance.
However, this development was expected by the various protagonists intervening in the local market due to many downward factors and no bullish outlook.
Thus, the commercial banks would have bought large quantities of foreign currency to respect the circular 158 of the Banque du Liban which should intervene on July 1, despite the affirmation of the Banque du Liban to have provided enough dollars. As a reminder, this circular aims to allow the customers of these establishments to withdraw 400 USD per month and the equivalent of 400 USD at the rate of 12,000 LL / USD – thus further increasing the money supply – from dollar accounts up to now frozen following the unilateral introduction of capital controls in November 2019. However, some banks require their customers to sign papers rejecting any possibility of a complaint against them.
In addition, the Bank of Lebanon has printed large amounts of liquidity over the past 2 years, further increasing this money supply.
Finally, the imminent end of the subsidy program for basic necessities, despite the announcement yesterday of the approval by the Lebanese authorities of an increase in the parity concerning the subsidies granted to fuels, which thus drops from 1507 LL / USD at 3900 LL / USD represents an inflationary measure that does not reassure the population.
