Lebanese currency plunges into new low-fuel national protests

The Lebanese currency has struck a new record of low-spark anger protests across the crisis-stricken nation, with the most serious anxiety since the outbreak of the pandemic.

The pound has fallen 20% since the end of last year, reaching £ 10,000 against the US dollar in black market trading on Tuesday and then returning to around £ 9,975. It is currently about 85 percent below the official exchange rate of the country.

The currency collapse means that the monthly minimum wage of L £ 675,000 is now worth only $ 67.50, but it is common for economic contractions to lose jobs and workers to endure salary cuts rather than salary increases. Nevertheless, the devaluation caused inflation in import-dependent countries.

Protesters burned garbage dumps and blocked roads in the capital Beirut and towns throughout Lebanon on Tuesday. This is a sign of national frustration that has not been seen since the massive anti-government protests that took place in October 2019.

The coronavirus “pushed people out of the street … but now there is a bounce,” said Sami Nader, director of the Levant Strategic Institute. “Because it added to the general frustration … And now they are even more desperate.”

Lebanon was financially weak long before the August 4 explosion at Beirut struck the capital, killing more than 200 people, plagued by suspicions of official corruption and mismanagement.

The explosion overthrew the government led by Prime Minister Hassan Diab. However, the protracted political crisis left the country without a financial bailout plan, with the Cabinet acting as a caretaker and the highly necessary bailout negotiations with the IMF taking place on the ice. Lebanon defaulted on its external debt a year ago, but local banks are in a liquidity crisis, making it nearly impossible for the country to borrow.

The economic situation of the import-dependent economy has deteriorated due to the blockade related to the coronavirus. Almost one-fifth of last year.. The banking crisis has greatly prevented customers from accessing their money, which has prevented them from saving in the US dollar.

Deterioration of the living environment is fueling anger. Government statistics show that average food and non-alcoholic beverage prices in December rose 400% year-on-year, and the World Bank says that 45% of the population now lives below the poverty line. I presume.

Lebanon has fixed its currency at a rate of around £ 1,500 per dollar since 1997 to create post-civil war economic stability that ended in 1997. Increased purchasing power in Lebanon and praised Riad Salame, Lebanon’s central bank governor. ..

However, the pegs were unleashed in late 2019, with currency trading in the black market in July 2020 at £ 9,600, but fell further this week.

Ehsan Khoman, Head of Emerging Market Research at MUFG, said: He added that reforms would be difficult, but “the crisis has become so complex that there is now a need for drastic action.”

The currency of neighboring Syria has also hit a new depth of £ 3,750 per dollar. It was hit by a decade of civil war in the country, but began to slow down only in late 2019, when the Lebanese economic crisis blocked access to Syria’s hard currencies, more than 30% of the currency’s year-to-date. It shows a decline. ..

Lebanese currency plunges into new low-fuel national protests

Source link Lebanese currency plunges into new low-fuel national protests

Back to top button