Lebanon: Lebanese pound hits low of 100,000 to dollar

The Lebanese pound fell to a historic low against the dollar on the parallel market Tuesday, marking the latest somber milestone in an economic meltdown that has reduced the majority of the population to poverty.

The pound, which was officially pegged at 15,000 to the dollar, was trading at 100,000 against the greenback, according to dealers, a dizzying drop from 1,507 before the economic crisis hit in 2019.

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In late January, the currency’s market value was around 60,000 to the dollar.

The currency depreciation has resulted in price increases for fuel, food, and other necessities, with supermarkets beginning to price items in dollars this month.

Despite the gravity of the situation, the country’s political elite, which has been widely blamed for the country’s financial collapse, has done nothing.

Since last year, the country has been without a president and only a caretaker government due to a continuing stalemate between rival factions.

“The lira has become completely worthless,” said Abu Abbas, 75, who owns a small jewelry stall on Beirut’s busy Hamra Street and is struggling to make ends meet.

“I used to buy medicine for my wife for 40,000 pounds, now it costs 900,000,” he told AFP.

Lebanese banks, which have imposed draconian withdrawal restrictions, effectively locking depositors out of their life savings, remained closed on Tuesday as part of an ongoing strike.

The strike began early last month in response to what the Association of Banks in Lebanon called “arbitrary” judicial measures taken against lenders after depositors filed lawsuits to recover their funds.

Some judges sought to seize bank directors’ or board members’ funds, or to compel lenders to pay out customers’ dollar deposits in pounds at the old 1.507 exchange rate.

Customers were granted a two-week reprieve from the strike after caretaker Prime Minister Najib Mikati intervened late last month to obstruct one of the judges investigating banks.

Withdrawal limits have sparked public outrage, prompting some Lebanese to resort to armed hold-ups in order to obtain their own money.

Many of the capital’s bank facades are almost unrecognizable from the outside, with protective metal panels covering them, and ATMs have been vandalized.

“Ruling politicians… robbed the country and stole depositors’ money,” a Beirut shopkeeper, Mohammad al-Rayes, said.

“They should leave and bring in new leaders,” the 65-year-old told AFP, adding that “very difficult times are ahead.”

Political inaction and a lack of accountability have been hallmarks of Lebanon’s economic crisis, which the World Bank has labeled as one of the world’s worst in recent history.

The International Monetary Fund announced an agreement in principle in April last year to provide Beirut with $3 billion in loans spread over four years, subject to a package of sweeping reforms.

However, officials have failed to implement the changes demanded by international creditors in exchange for the emergency loans.

Riad Salameh, the governor of the central bank, is being investigated both at home and abroad for alleged embezzlement of hundreds of millions of dollars.

Salameh has been summoned by a Lebanese judge to appear before visiting European investigators on Wednesday as part of a multinational investigation into his personal wealth.

Lebanon is facing an economic meltdown with no clear leader, as the country’s divided parliament has been unable to elect a new president for months — despite the fact that the country is already governed by a caretaker cabinet with limited powers.

Repeated sessions to elect a successor to Michel Aoun, whose term expired in October of last year, have all failed to produce a consensus candidate.

The pound’s steady decline reflects a “complete loss of confidence in the country’s policymakers,” according to Saeb El-Zein, a Lebanese former banker who worked with international lenders.

“To have economic leadership, you need political leadership — and we don’t have political leadership,” he told AFP.

AFP.

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