Saudi Press

Saudi Arabia and the world
Friday, Aug 08, 2025

Inflation spirals out of control as Lebanon drowns in excess pounds

Local currency in circulation soars 137% as it loses 80% of its value amid ongoing economic crisis
The excess volume of Lebanese currency in circulation over the past months has been alarming and is causing inflation to spiral out of control amid rising demand for US dollars and other foreign currencies, financial analysts have told Arabian Business.

Currency in circulation soared 137 percent to LBP23.2 billion by July 15, from LBP9.8 billion at the end of 2019 and 257 percent from LBP6.5 billion in September 2019.

The central bank printed LBP13 trillion in 50,000 and 100,000 bills last autumn. In weight, this amounts to 9 tonnes of paper money.

Analysts said the central bank is not printing money as a result of an increase in gold and foreign currency reserves, but to cover the debts of banks and treasury.
The printing process as a solution to the liquidity crisis in the treasury came at the expense of the Lebanese pound, and everyone who receives their salary in the local currency, be it in the private or public sector, they added.

Printing more Lebanese pounds when the reserves of foreign currencies (especially the US dollar) are depleted also means that the value of the pound will continue to drop in the face of these currencies, analysts told Arabian Business, adding that it will have a direct impact on the local market and prices will soar as a result.

People lined up in front of bakeries and butcher shops hoping to buy goods before prices rise the next day.

The Lebanese pound has lost around 80 percent of its value in a year. Money exchangers on the black market were buying the dollar for around LBP8,300 on Friday. The associated skyrocketing inflation hit a record 120 percent by the end of August.

Dr Marwan Barakat (pictured above), group chief economist and head of research at Bank Audi, told Arabian Business: “One of the main reasons the Lebanese pound came under significant pressure on the parallel market causing corollary inflationary spikes in recent times is the excessive money creation in Lebanese pounds. The reasons for the depreciation of the local currency relative to the US dollar are actually multiple.

"First, they revolve around the increased political uncertainties leading to a gradual loss of confidence. Then there is the significant creation of money in the Lebanese pound with the currency in circulation almost doubling on an annual basis amid large fiscal deficits with direct monetisation on behalf of the Central Bank. This excessive money creation has put pressure on the parallel exchange market and fueled inflation.”

He added: “While the effects of any immediate measure to curtail currency depreciation and inflation would remain temporary, a containment of monetary drift looking forward is conditional upon a positive confidence shock related to political and economic management and a parallel containment of Lebanon’s excessive creation of money."

Dr Samih Azar, professor, Faculty of Business Administration and Economics, Haigazian University, Beirut, told Arabian Business that the excess supply of currency in circulation has caused an excess demand for the US dollar in the alternative spot market and the depreciation of the Lebanese pound.

"The exchange value of the Lebanese pound doesn’t depend only on the actual currency in circulation, but should be adjusted to dwindling currency demand. In addition, underestimating the exchange value of the Lebanese pound may result from overstating the actual data on currency supply.”

He added: “Some of the reasons for the underestimation may be due to the subsidisation of basic goods and commodities by the central bank, which has signaficantly reduced the demand for US dollars, especially by traders... Moreover, no or little subsidies will inevitably lead to consumer price hikes, which will cause further deterioration."
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Nine people have been hospitalized and dozens of salmonella cases have been reported after an outbreak of infections linked to certain brands of pistachios and pistachio-containing products, according to the Public Health Agency of Canada
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
Tariffs, AI, and the Shifting U.S. Macro Landscape: Navigating a New Economic Regime
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Germany’s Economic Breakdown and the Return of Militarization: From Industrial Collapse to a New Offensive Strategy
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Russia Formally Recognizes Taliban Government in Afghanistan
Mediators Edge Closer to Israel-Hamas Ceasefire Agreement
Emirates Airline Expands Market Share with New $20 Million Campaign
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
Iran's Parliament Votes to Suspend Cooperation with Nuclear Watchdog
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
Explosions Rock Doha as Iranian Missiles Target Qatar
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Oman Set to Introduce Personal Income Tax, First in Gulf
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
×