BEIRUT (AP) – Lebanon’s embattled currency hit a new low yesterday, trading at an unprecedented LBP100,000 to the dollar on the black market as the crisis-hit country’s banks went back on strike.
The pound has kept sinking since Lebanon’s financial meltdown erupted in 2019, following decades of rampant corruption and mismanagement by the country’s political and financial elite. Three-quarters of Lebanon’s population of over six million now lives in poverty and inflation is soaring.
The new rate of LBP100,000 to the dollar was posted on mobile apps yesterday used by private money exchangers. Exchange shops and businesses use rates off these apps, and authorities have failed to shut down the apps and crack down on a ring of suspected exchangers across the country who run the programmes.
While the official exchange rate is set by the Central Bank at LBP15,000 for USD1, the black market rate is now used for nearly all transactions. With trust in the pound declining, most grocery stores, restaurants and other businesses have opted to start pricing their goods and services in dollars. While this “dollarisation” aims to ease inflation and stabilise the economy, it also threatens to push more people into poverty and deepen the crisis.
In late 2019, Lebanese banks imposed informal capital controls, restricting cash withdrawals from accounts to avoid folding amid currency shortages. People with dollar accounts could only to withdraw small sums in Lebanese pounds, at an exchange rate far lower than that of the black market. This effectively evaporated the savings of many across the country.
Angry depositors resorted to armed bank heists, demanding their own money. Others have filed lawsuits from abroad to retrieve their money in hard currency.
Last month, Lebanese commercial banks went on an open-ended strike and angry protesters took to the streets, smashing windows and setting tyres on fire outside two of the country’s biggest banks in Beirut.