Lebanon’s unified exchange rate, in place of the three varying rates it had used in recent years, was a step toward a more consistent value for the pound.
The pound was set at 15,000 per dollar by the Banque du Liban, Lebanon’s national bank. According to individuals familiar with the situation, this depreciated the government rate of 1,500 by 90%. It also brought in the new level in place of two different rates on foreign-currency deposits: 8,000 and 12,000 each.
The decision represents Lebanon’s intention to implement economic changes. This is part of a $3 billion loan it has obtained from the International Monetary Fund (IMF). Yet, the country has a considerable way to go before it reaches the unofficial level of around 62,000 pounds per dollar that much of the economy operates at.
What is the impact on Lebanese nationals?
The new rate, on the other hand, offers little solace to most Lebanese people since it mostly affects banking operations. It will influence how quickly they can save or borrow money. The new rate, which boosts customer pound returns, will be applied to customers with foreign-exchange deposits. Yet, the repayments of dollars will grow by an identical amount.
The revised rate corresponds to the one applied by authorities for customs, taxes, and charges. In the face of triple-digit inflation, this occurred after three years of dwindling revenues.
How are distressed markets coping?
Before the IMF executive board can approve disbursements, the agreement says that authorities must take specific steps. Restructuring and auditing the banking industry, as well as shifting to a fair exchange rate, are among them.
Pakistan and Egypt, for example, are both under pressure to devalue their currencies. After the country’s foreign reserves plummeted, Egypt devalued its pound three times in the last year.
Lebanon seeks to put an end to a financial crisis that the World Bank has described as “one of the worst” since the mid-nineteenth century. Three-quarters of the population was impoverished because of the meltdown. But, even though politicians are divided on how to address the country’s problems, no solution has been reached.