Saudi Press

Saudi Arabia and the world
Sunday, Jun 01, 2025

Value of Lebanese pound drops to all-time low

Value of Lebanese pound drops to all-time low

The black market rate, widely used across the country, now sits at 35,600 to the US dollar.

The black market value of the Lebanese pound has fallen to an all-time low of 35,600 against the US dollar, a drop from 26,800 in the space of just two weeks, and a sign that Lebanon’s economic crisis is set to continue to cripple the country.

The exchange rate is unofficial, but is the one primarily used across Lebanon.

The depreciation of the Lebanese pound has caused a ripple effect, causing even more economic difficulties for the country.

Petrol prices in three weeks surged by almost 25 percent, while the government is expected to soon further roll back medicine subsidies and increase their prices.

Meanwhile, Lebanese authorities continue to implement temporary measures to alleviate wheat shortages.

This rapid unravelling, just 10 days after cash-strapped Lebanon elected a new parliament, comes after a few months of relative calm for the fragile currency, which has lost 90 percent of its value in less than three years.

The authorities primarily blame global inflation, and the effect of Russia’s war in Ukraine on international wheat and fuel prices. However, experts say domestic reasons play a large role in creating the economic conditions that currently exist in Lebanon.

“When global prices change, Lebanon is not hit once, but twice,” financial adviser Michel Kozah told Al Jazeera. “It’s because we cannot protect the value of the Lebanese pound.”




More makeshift measures, fewer resources


Lebanon hobbled into 2022 in similar circumstances, as the Lebanese pound’s value started to depreciate after the Christmas season.

However, the central bank was able to offset this at the time by spending dollars from its foreign reserves to fund its exchange rate platform Sayrafa.

This enabled the central bank to offer a more preferable exchange rate than the black market, and encourage banks and businesses to buy their dollars from Sayrafa.

The effect of this was a reduction in the number of Lebanese pounds flooding the market – thus improving its value – while also weakening the unofficial parallel rate on the black market.

“The central bank would take Lebanese pounds away from the market and throw dollars in to keep the rate stable,” Kozah told Al Jazeera.

The policy was initially a success. By mid-January, the Lebanese pound’s value against the dollar in 24 hours went from above 31,000 to just under 28,000

But Lebanon’s resources are limited, and this latest example of financial wizardry was not sustainable.

The central bank’s foreign reserves are estimated at just $11bn, which includes just over $1bn in International Monetary Fund Special Drawing Rights – an international asset that can be converted into hard currency.

The IMF introduced SDRs to provide a cash injection to help countries cope with the economic effect of COVID-19.

Lebanon’s reliance on importing almost all its goods, and its banks losing an estimated $69bn since August 2019, mean the country is suffering.

And with the currency spiralling out of control, Lebanon’s distressed population, three-quarters of which lives in poverty, fears a repeat of last summer, when importers hoarding fuel and medicine forced much of the population to buy petrol, diesel for electricity, and life-saving medicines from the black market.

“What’s frightening is that like last summer we’re seeing importers hoarding goods and waiting for prices to rise so they can sell at a higher profit,” political and economic researcher Karim Merhej told Al Jazeera, adding that Lebanon’s government does not have the resources to crack down on hoarding, smuggling and illicit price hikes. “It’s a Wild West, free-for-all type situation.”




‘The only way forward’


With dwindling resources, a cabinet now operating in a limited caretaker capacity, and a divided new parliament that has not yet met, Lebanon is in for a difficult summer. Inflation is already set to worsen, as mobile phone bills in July will be five times more expensive and internet bills almost triple.

Newly elected politician Mark Daou, who along with about a dozen other anti-establishment candidates made a surprise breakthrough in the elections, says it will be up to them to make sure there is no political paralysis in Lebanon, and that the country’s politicians enact reforms.

“Financial reforms like capital controls, banking secrecy, judicial independence and a few others are fundamental for regaining trust and stabilising the markets,” Daou told Al Jazeera. “I think the new MPs will bring some positive dynamics in parliament, forcing blocs to meet and conduct policies that are suitable.”

The country’s new parliament has a long list of tasks with little time to waste when it does meet.

Lawmakers need to swiftly appoint a new prime minister-designate, and hold consultations to form a new and viable government.

Then, in order to receive an IMF bailout, the Lebanese parliament needs to enact a handful of financial and accountability reforms that the country’s traditional political parties, commercial banks and central bank have stalled for years. This includes passing a state budget, making Lebanon’s judiciary independent from the government, and auditing the central bank.

“I think we need a cabinet of experts, especially [those with a background] in restructuring corporations and countries, and I think they need exceptional legislative powers so not every decision gets stalled in parliament,” Kozah said. “And we need to implement the reforms for the IMF. This is the only way.”

Lebanon’s influential commercial bank lobby earlier this week slammed the government for its latest iteration of the IMF’s financial recovery plan, hinting at further deadlock.

“I think this parade of temporary measures will unfortunately continue,” Kozah admitted.

Lebanon desperately needs a cash injection to make its paralysed economy viable again. And at a time when people need them the most, there are no viable public healthcare, education and social protections.

Regardless of whether Lebanon is able to get out of the crisis, Merhej said that all this could have been avoidable, and that the government allowed the economy to get to the place it is today.

“It never had to be this bad,” Merhej said. “The authorities could have tackled the crisis as it was brewing back in August 2019 by implementing the necessary policies in a transparent manner – but they chose not to.”



Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
The Daily Debate: The Fall of the Dollar — Strategic Reset or Economic Self-Destruction?
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
Saudi-Spanish Business Forum Commences in Riyadh
Saudi Arabia and Spain Sign MoU to Boost SME Sectors
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
A Chinese company made solar tiles that look way nicer than regular panels!
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
Saudi Arabia Emerges as Global Tech Magnet with U.S. Backing and Trump’s Visit
This was President's departure from Saudi Arabia. The Crown Prince personally escorted him back to the airport.
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
Trump takes a blow torch to the neocons and interventionists while speaking to the Saudis
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
×