Lebanese currency hits record low on the black market

Lebanese currency drops and the dollar exchange rate exceeds 10,000 pounds to the dollar and surpassed it in some regions of Lebanon, as reported by some platforms that are trading.

Due to the increase, the semi-fixed margin that oscillated between 8,000 and 8,500 has been broken in recent weeks, rising to around 1,500 pounds in a few days. Hours earlier, the dollar exchange rate rose against the pound sterling during unofficial parallel market transactions following the easing of the closure measures. 

The dollar on the black market ranged between 9,800 and 9,850 pounds to the dollar, according to local media reports. The record drop came on Tuesday, a day after the Bank of Lebanon announced the start of a bank restructuring plan for the sector. This entailed a review of banks' conditions after the expiry of a deadline set for them to increase their capital.

The Central Bank, in the summer of 2020, asked banks to increase their capital by 20% by the end of February. In addition, they were required to form an account of no less than 3% of the total foreign currency deposits of correspondent banks abroad. If the banks failed to meet the standards, their shares would become the property of Banque du Liban.

Local newspaper Al-Akhbar reported on Tuesday that the acceleration of the lira's collapse was due to a number of factors, with banks withdrawing large sums of dollars from the market.

Lebanon has been plunged into a major economic crisis since the summer of 2019. This led to a fall in the value of the local currency and a loss of 80% of its value against the dollar (£1,500). This stimulated inflation rates and caused thousands of people to lose their jobs.

Commodity prices have risen by 144%, according to International Monetary Fund estimates. More than half of the population is below the poverty line.

The currency slump has led to an escalation of violence in the streets. Dozens of protesters blocked streets with burning tyres and bins, reports the French daily Le Monde.

Moreover, Lebanon has been in a political stalemate for six months awaiting a new government.