Vahe H. Apelian
The determination of the Lebanese currency rate is a mystery.
On February 1, Reuters reported the following: “BEIRUT, Feb 1 (Reuters) - Lebanon devalued its official exchange rate for the first time in 25 years on Wednesday, weakening it by 90% but still leaving the local currency well below its market value. The pound has crashed since a financial meltdown in 2019 after decades of corruption, profligate spending and mismanagement by the ruling elite in Lebanon which has left the crisis to fester despite soaring poverty. The central bank confirmed the new official rate of 15,000 pounds per dollar, scrapping the rate of 1,507.5 pounds at which the currency was pegged for decades before the collapse.”
But that official exchange rate pales in comparison to what the market bears and no one in Lebanon seems to care what the official exchange rate is, for that very reason. Also, for the fact that the banks have put a cap on the amount of dollar a depositor may withdraw from savings, should the person have a savings account. But all claim the allowance of withdrawing their own money is not enough to cover their ongoing needs given the state of the economy and hyperinflation.
On February 11, 2023, the exchange rate on the market was 66,300 LL for a green buck. Today the exchange rate is 92,300 LL for a $. When I ask my friends in Lebanon who sets that exchange rate and titrates to a fraction such as 93,200 LL? They tell me nobody seems to know. They tell me that they read the rate posted in the internet or become aware of it on the market, and realize that their purchasing power has eroded further and that their daily necessities will be even more expensive. This hyperinflation appears to have no end in sight.
Meguerditch Hagop Bouldoukian is an internationally acclaimed economist and the author of many books. He was the founding Dean of the Business and Economics Department at Haigazian University, former Deputy Governor at Banque du Liban - The Central Bank of Lebanon and has held other important positions in the finance world. A few days ago, he noted the following on his Facebook page:
“If the current indecent leaders of the Lebanese state (for more than 30 years) leave the arena, optimism can be created among the public, which brings forth confidence, which is what everyone needs. The value of the paper currency devalued from 12,000 to 91,500 per $, after Najib Mikadi became the prime minister.” Najib Mikadi is a billionaire. He was elected as the prime minister on September 10, 2021, thirteen months after the resignation of the previous prime minister. It is not hard to visualize the implication on the people’s lives the devaluation of the Lebanese currency from 12, 000 LL to 91, 500 had during the past 18 months.
Lebanese are known for their resiliency and for their pungent humor in face of adversity. My friends Krikor Kradjian, let me know yesterday that the Lebanese are sarcastically faulting the Italians for their anguish - حق على الايطاليان" ! - "sparing" their illustrious leaders !
Krikor emailed me the following:
“Lebanon is the country where civilizations, armies, conquerors and tyrants have come and gone and left their mark.
The Lebanese have this saying: "The fault is with the Italians".
In order to impose its presence in the Mediterranean Sea and, in particular, to keep the Suez Canal open, the command of the Italian Navy decided to destroy the battleships and maritime centers belonging to the Ottoman naval forces stationed along the coast of Beirut.
On February 24, 1912, two Italian warships attacked and sank the warships of the Ottoman Navy. The city of Beirut also received its share of bombing. Sixty-six (66) citizens were killed and hundreds were injured. The attack by the Italians was unexpected and a surprise for the citizens of Beirut, who were leading a peaceful life.
Thereon, whatever calamity or adversity happened, the Lebanese attribute it to the Italians, even nowadays, they repeat the claim (dismissively of course):
"Italians are the culprits. !"
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