The parity of the Lebanese pound is now above 28,000 LL / USD, causing people to question the reasons behind this further deterioration.
It should be remembered that now, the minimum wage which was equivalent to 450 USD barely 2 years ago, is now approaching 20 USD and that the median wage, 1,500,000 LL, is only worth around 55 dollars, pushing further a large part of the population in poverty. More than 80% of the population now live below the poverty line and even 42% in a state of extreme poverty, a UN official said last month.
It should be recalled that the governor of the Banque du Liban Riad Salamé increased the parity used by circular 151 from 3,900 LL / USD to 8,000 LL / USD to withdraw the lollars, at the request of the president of the chamber Nabih Berri , knowing that lollars are equivalent to 15% to 20% of real dollars.
This implies that the BdL implicitly recognizes that the next target of the black market exchange rate will be 40,000 LL / USD, all other constant parameters, which is also in line with the plan to increase the minimum wage by 600,000 LL which was equivalent to 30 USD at 2 million pounds still equals 30 USD without any productivity gain, resulting in the same parity.
Obviously, there is not a single reason for this deterioration of the local currency for 2 years now, other than a series of bad decisions, one after the other, such as the establishment of a maintenance policy. parity against the dollar for 25, thus increasing monetary pressure instead of letting the pound float, the increase for 2 years in the money supply without any real control, the lack of economic and financial visibility, especially in the banking sector and the lack of confidence in current banks since the introduction of informal capital controls, the end of subsidies that somewhat controlled inflation and even today the increase in demand on the black market in particular because the Banque du Liban estimates that 15% of fuel purchases must be financed via parallel markets instead of 100% via its Sayrafa platform, which is supposed to meet the demand of institutions f inancials to unify exchange rates and I will pass on the rest.