Friday, March 1, 2024

Lebanon’s currency hits record low

The Lebanese pound has sunk to a historic low against the US dollar on the country’s parallel market. It's the latest sombre milestone in an economic meltdown that has plunged much of the population into poverty.

The Lebanese pound, officially pegged at 15,000 to the dollar, was trading at 100,000 against the greenback, dealers said on Tuesday – a dizzying plunge from 1,507 before the economic crisis hit in 2019.

The currency’s market value was at about 60,000 to the dollar in late January.

Despite the gravity of the crisis, the political elite, which has been widely blamed for the country’s financial collapse, has failed to check the currency’s free fall.

Since last year, the country has had no president and only a caretaker government, amid persistent deadlock between rival alliances in parliament.

Lebanese banks that have long imposed draconian withdrawal restrictions – essentially locking depositors out of their life savings – were closed on Tuesday as they resumed an open-ended strike.

The strike began early last month to protest against what the Association of Banks in Lebanon described as “arbitrary” judicial measures against lenders after depositors filed lawsuits to retrieve savings.

In response to the lawsuits, some judges sought to seize the funds of bank directors or board members or to force lenders to pay out customers’ dollar deposits in pounds at the old 1,507 exchange rate.

Customers had a two-week reprieve from the strike after caretaker Prime Minister Najib Mikati intervened late last month to impede the work of one of the judges investigating banks.

Over the past three years, bank withdrawal limits have sparked public outrage that has seen some Lebanese resort to armed hold-ups in a bid to lay hands on their own money.

The facades of many banks in the capital are almost unrecognisable from the outside, covered in protective metal panels, while ATMs have been vandalised and bank branches have repeatedly closed for days.

In mid-February, dozens of angry demonstrators attacked several banks in Beirut after the pound sunk to about 80,000 against the greenback.

Political inaction and a lack of accountability have been a hallmark of the Lebanese economic crisis.

Officials have failed to enact any of the reforms demanded by international creditors in return for unlocking billions of dollars in emergency loans.

In April last year, the International Monetary Fund announced an agreement in principle to provide Beirut with $3bn in loans spread over four years – conditional on a package of sweeping reforms.

Lebanon is facing the economic meltdown largely leaderless, as divided politicians have failed to elect a new president for months – in a country already governed by a caretaker cabinet with limited powers.

Lebanon has had no president since Michel Aoun’s term ended in October. Repeated sessions of parliament convened to elect a successor have all failed to reach an agreement on a consensus candidate.

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