Dollar Falls to Black Market in Lebanon as Foreign Currency Reserves Erode

Lebanon, like Egypt and Pakistan, abandoned a fixed exchange rate in January and devalued its currency by 90% on February 1, resulting in a historic decline in the value of its currency. The Lebanese lira has depreciated by 98% against the US dollar over the past three years, and the dollar has risen to 100,000 Lebanese pounds on the black market.

The Lebanese economy has been facing a significant crisis for the past few years, due to a combination of factors including political instability, high debt levels, and a large influx of refugees from neighboring Syria. To address the crisis, the Lebanese government has implemented a few measures, including freezing dollar deposit accounts in banks and attempting to negotiate a bailout with the International Monetary Fund (IMF). However, progress on these measures has been slow, and the economic situation in Lebanon remains highly uncertain.

Impact of Inflation and Financial Sector

In addition, inflation has reached triple digits, making the economic situation in Lebanon more delicate and fragile amid the government’s efforts to deal with the crisis, the popular uprising in 2019 that led to the overthrow of the government, and the chaotic situation caused by the pandemic. The financial sector has been forced to implement extraordinary measures in response to the inflationary environment and the shortage of foreign exchange reserves.

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