Understanding Lebanese Money and the Country's Economic Challenges

The Lebanese pound, also known as the lira, is the official currency of Lebanon.

Lebanon's economy has faced significant challenges in recent years, including a severe financial crisis that has led to a sharp decline in the value of the pound.

The country's currency has lost over 90% of its value since 2019, making everyday items unaffordable for many Lebanese citizens.

Lebanon's economic challenges are complex and multifaceted, but one key factor is the country's reliance on imports, which has put a strain on the currency.

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Lebanon's economy is primarily based on services, including tourism, banking, and trade. The country has a well-developed financial sector and has historically been a regional financial hub.

High levels of public debt, political instability, and regional conflicts are major economic challenges facing Lebanon. The country has also experienced a severe economic and financial crisis in recent years.

The value of the Lebanese pound has hit an all-time low, trading at 50,000 to the U.S. dollar. This is a drastic decline from its previous value of 1,500 to the dollar.

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Over 90% of the Lebanese pound's value has been lost since late 2019, causing a significant decline in living standards. The financial crisis has plunged three-quarters of the population into poverty.

Lebanese authorities have reached a tentative agreement with the International Monetary Fund for a recovery plan, but progress has been slow. The IMF has been critical of Lebanon's sluggish efforts to meet the required economic reforms and anti-corruption measures.

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The Lebanese Pound is pegged to the US Dollar at a fixed exchange rate of 15,000 pounds for $1, which has been maintained by the Central Bank of Lebanon since 1997.

This fixed exchange rate system was adopted to help stabilize the economy and restore confidence following years of civil war and political instability.

The Central Bank of Lebanon intervenes in the foreign exchange market to maintain the desired exchange rate, buying or selling US Dollars as needed.

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Lebanon's economy is primarily based on services, including tourism, banking, and trade, with a well-developed financial sector that has historically been a regional financial hub.

However, Lebanon faces various economic challenges, including high levels of public debt, political instability, and regional conflicts, which have led to a severe economic and financial crisis in recent years.

The crisis has resulted in hyperinflation, a collapse in the value of the Lebanese Pound on the black market, and a decline in living standards, with three-quarters of the population now living in poverty.

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Lebanon's currency has hit a record low, trading at an unprecedented 100,000 Lebanese pounds to the dollar on the black market.

The country's financial meltdown has been ongoing since 2019, following decades of corruption and mismanagement by the political and financial elite.

Three-quarters of Lebanon's population of over 6 million now lives in poverty, and inflation is soaring.

The official exchange rate is set by the Central Bank at 15,000 pounds for $1, but the black market rate is now used for nearly all transactions.

Most grocery stores, restaurants, and other businesses have opted to start pricing their goods and services in dollars, a move known as "dollarization."

This aims to ease inflation and stabilize the economy, but it also threatens to push more people into poverty and deepen the crisis.

Lebanese banks have imposed informal capital controls, restricting cash withdrawals from accounts to avoid folding amid currency shortages.

People with dollar accounts can only withdraw small sums in Lebanese pounds, at an exchange rate far lower than that of the black market.

The banks have gone on an open-ended strike, and angry protesters have taken to the streets, smashing windows and setting tires on fire outside two of the country's biggest banks in Beirut.

The banks reopened their doors in late February, but have since shuttered them again, slamming the judiciary for not "correcting flaws" in recent lawsuits against them.

Lebanon has stalled on implementing wide-range reforms agreed to with the International Monetary Fund to access $3 billion in a bailout package and unlock funds in development aid to make the economy viable again.

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The country's national currency has lost over 90% of its value since late 2019, with the cash-strapped country struggling to cope with some of the world's sharpest inflation.

Experts blame the country's entrenched ruling elites for decades of corruption and financial mismanagement.

A European judicial delegation has landed in Beirut to interrogate embattled Central Bank Governor Riad Salameh and a dozen affiliates in a European money laundering investigation of some $330 million.

The Lebanese Pound is pegged to the US Dollar at a fixed exchange rate. This means its value relative to the US Dollar remains constant, regardless of fluctuations in global currency markets.

The fixed exchange rate system was adopted in 1997 to help stabilize the Lebanese economy.

The Central Bank of Lebanon maintains the peg by intervening in the foreign exchange market, buying or selling US Dollars as needed to maintain the desired exchange rate.

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Armed hold-ups have become a desperate measure for some Lebanese to access their own money, a result of bank withdrawal limits that have sparked public outrage over the past three years.

The facades of many banks in Beirut are now covered in protective metal panels, a stark reminder of the volatile situation.

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

Lebanese citizens are resorting to extreme measures due to a lack of accountability and inaction from officials.

Bank branches have repeatedly closed for days, and ATMs have been vandalised, leaving many without access to their funds.

The economic crisis in Lebanon is largely leaderless, as divided politicians have failed to elect a new president for months.