The Lebanese Lira rate is currently facing one of the worst challenges in its history. The Lebanese Pound also faced high inflation during the civil war of Lebanon from 1975 to 1990.
1- Lira Rate Pegging To The Dollar:
The Lebanese government made a significant decision regarding the Lira in December 1997. Since then, the exchange rate has been fixed at 1,507.5 per US dollar.
This required massive intervention by the BDL (Banque Du Liban), the Lebanese Central Bank, by pumping dollars into the economy; thus, the estimated cost of fixing the Lira since 1997 is around 35 billion dollars.
2- Import Export Deficit:
Adding insult to injury, the Lebanese market is used to import most of its needs from abroad, which puts enormous pressure on the Lira. The automotive industry imports alone are estimated at 7 Billion dollars per year.
Since the beginning of 2020, Lebanese banks started to extend their Ponzi scheme by offering a whopping 15% to 20% interest rates on blocked USD accounts to attract more fresh dollars from Lebanon, Lebanese immigrants, and foreign investors.
Many fell into the deceptive scheme!
3- The Revolution
On October 17, 2019, the Lebanese revolution started. The banks took the opportunity to smuggle a massive amount of dollars for their owners, board members, and, most notably to politicians outside the country. The exact amounts are yet to be defined, but speculations estimate more than 10 billion.
The Lira crisis took its toll on every aspect of the citizen’s and businesses ‘ lives.
For example, Car importers ask for fresh dollars USD from their clients, or else; how would they buy vehicles from the manufacturers abroad?
Prices of goods skyrocketed, which what looks to be the worst hyperinflation in Lebanon’s history, bar none.
NB: We are accepting guest posts. If you are an expert in the financial and economic sphere, please do not hesitate to contact us using the comments box.
For general and business inquiries, please send us an email here: firstname.lastname@example.org.
Furthermore, If you find this post helpful or have any comments, questions or information, please do not hesitate to use the comments box below!