After several months of relative calm, the Lebanese pound has plunged to a record low of 35,600 per dollar, according to reports. This drop in the currency is expected to exacerbate Lebanon’s economic challenges.
In a sign that the ongoing economic crisis in Lebanon is worsening, the black market exchange rate for the Lebanese pound has reportedly plunged to an all-time low of 35,600 to the dollar. Al Jazeera reports that it took only two weeks for the black market exchange rate for the pound to fall from 26,800 yen to this rate. At the time of this writing, the official exchange rate for the pound is 1,510 yen to the dollar.
The reported rapid depreciation of the pound has exacerbated the already difficult economic situation in Lebanon. Also, as noted in the Al Jazeera reportPrior to the plunge in the currency, gasoline prices rose by 25%. Plans to eliminate subsidies could lead to further price increases, which would further exacerbate the plight of residents.
Lebanese authorities blame rising global inflation, but some experts believe the country’s deteriorating situation is primarily due to domestic reasons.
One of the experts, financial advisor Michel Koza, explains:” When global prices change, Lebanon is hit not once, but twice. This is because the value of the Lebanese pound cannot be protected.”
Lebanon reportedly succeeded in temporarily halting the pound’s decline earlier in the year, but was unable to maintain its pound defense policy due to the country’s limited resources.
Meanwhile, one newly elected politician, Mark Dow, is quoted in the report as arguing that Lebanon cannot escape its current predicament without implementing reforms.
“Financial reforms like capital controls, banking secrecy, judicial independence, and several others are fundamental to restore confidence and stabilize the market,” Daou explained.
The politician added that the country needs to implement reforms because this is the only way to qualify for an International Monetary Fund (IMF) financial bailout.
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