The black market exchange rate for dollars in Lebanon has soared over 2,000 pounds to the dollar, with some money exchangers reporting rates as high as LBP 2,200 to $1 – nearly a 50 percent jump from the pegged rate of LBP 1,501-1,514 to the dollar.
The impact of Lebanon’s ongoing dollar scarcity is wide-ranging, as importers are not able to find the funds to pay for goods, leading to shortages in food and medical supplies. Lebanon is a heavily import-dependent country, and requires 80 percent of its food to be imported, according to the UN’s Food and Agriculture Organization.
Business owners recently told Al Arabiya English that they are struggling to survive as the sources of cash dry up, reducing economic activity and stoking fears among the people as to their own savings.
As Lebanese worry about their own savings and try to withdraw money, regulation and policies have been put in place to limit withdrawals and banks. Dollar withdrawal from ATMs, previously a common practice in Lebanon, was curtailed in early October. Since then banks have continually put more unofficial capital controls in place to control the flow of foreign currency in, out, and around the economy.
The high exchange rates are “creating inflationary pressure and price increases in the market, especially that their money now is at home,” said Dr. Nassib Ghobril, head of economic research and analysis at Byblos Bank, one of Lebanon’s largest banks.
Ghobril is referring to is the large quantity of cash that has been hoarded by citizens since before the crisis began. In a televised address earlier this month, central bank Governor Riad Salameh said that $3 billion had been withdrawn from banks but that the money had stayed in Lebanon.
“This is terrible, and unhealthy, and this is because of fear. Lebanese are worried about not being able to withdraw cash from ATMs and so are storing them at home,” commented Dr. Louis Hobeika, professor of economics at NDU Lebanon.