Lebanese pound witnesses remarkable improvement

By Al Mayadeen Net
Source: Agencies
16 Jan 2022 12:54

The exchange rate dropped from 34,000 to 26,000 Lebanese pounds per dollar.

Lebanon's Central Bank Governor claimed that Circular No. 161 "aims at curbing the volatility of the exchange market."

After the unprecedented historical collapse that the Lebanese pound witnessed when it reached 34,000 liras against the dollar, the exchange rate of the lira recorded a remarkable improvement after the Central Bank of Lebanon allowed depositors through Circular No. 161 to replace Lebanese pounds with US dollars.

On Saturday, one dollar was equal to 26 thousand Lebanese pounds, after it was 27 thousand pounds in the early morning hours.

The economic expert, Professor Jassem Ajaka, noted that Circular No. 161 increased dollars in the Lebanese market in exchange for Lebanese pounds, which greatly contributed to reducing the lira exchange rate against the dollar on the black market.

Ajaka explained that there is an imbalance in the Lebanese economy that consumes dollars and does not produce them back.

Before the crisis, Lebanon was importing $20 billion in exchange for $3 billion exports. Circular No. 161 was meant to fix the imbalance in the monetary environment and not to fix the imbalance in the economic and financial environment, the expert noted.

The circular is only capable of fixing the monetary environment and cannot reform the economic and financial environment of the state. If the Lebanese government does not cooperate with the International Monetary Fund, the circular will remain temporary.

Regarding the source of the dollars that the Central Bank is working to pump into the market, Ajaka pointed out that these funds primarily come from huge dollar transfers from abroad.

The professor pointed out that the Lebanese government should focus on maintaining the low exchange rate against the dollar by prosecuting and punishing violators.

In an interview with Reuters last Friday, Lebanon's Central Bank Governor Riad Salameh claimed that Circular No. 161 "aims at curbing the volatility of the exchange market and aims at strengthening the pound's value against the dollar."

Photos circulating on social media showed citizens in Lebanon carrying travel bags or boxes containing money in local currency to exchange them with US dollars.