Citizens' suffering with the collapse of the Lebanese pound ... Who is manipulating the cash market in Lebanon?

From the north to the south, hundreds began pouring into the street to express the anger of the Lebanese after the exchange rate of the dollar against the pound recorded a collapse, unprecedented in the history of Lebanon on Tuesday, as it jumped to the threshold of 10,000 pounds against the dollar on the black market that actually controls the value of the national currency, after That the official exchange rate of the dollar (1507 pounds) has become a mere fictitious number that does not exist in the Lebanese market.

On the sidelines of road blockages in Tripoli - which is the most miserable city in Lebanon after extreme poverty rates reached more than 70% according to experts - Umm Muhammad (45 years old) used to move between vegetable stalls and inspect damaged boxes for some potatoes and tomatoes, and beg sellers for permission. Have to buy them cheaply.

And this lady - who relies with her children on the work of her husband who works as a day laborer for 25,000 pounds (less than $ 3 a day) - told Al-Jazeera Net that this amount is no longer sufficient for them even for the cost of worn-out vegetables and grains. Some fines are by charities. "

Umm Muhammad angrily said, "We live in unbearable exertion, and merchants like the state do not show mercy to people with their greed and greed, and I started to travel on foot so that I would not pay the taxi fare after the rise in fuel prices, and I am thinking of paying my son to leave his official school and work to support us, because we are also unable to provide a rental value." Our house is dilapidated. "

who is in Charge?

In contrast to these tragedies, there are a set of interlocking factors that led to the collapse of the Lebanese pound reaching this low level, from speculation on the black market and the scarcity of the dollar, but some analysts considered that the fall of the pound to 10 thousand pounds was the result of the circulars issued by the Central Bank of Lebanon, the last of which was the expiration of the deadline for implementation. Circular 154 on February 28, which asked banks to increase their capital by 20% and create liquidity by 3% at correspondent banks abroad as part of a plan to restructure the banking sector.

Experts believed that the expiration of the deadline for this circular prompted some banks to withdraw huge amounts of dollars from the black market, and thus demand increased in exchange for the scarcity of its supply, which made it touches 10,000 pounds.

However, banking risk expert Muhammad Fahaili ruled out that banks have a hand in the high exchange rate of the dollar, because banks are able to secure their dollar liquidity from abroad to place them in correspondent banks without going to the black market.

Fahaili considers that the BDL circular came as a temporary solution, waiting for the political authority to wake up to initiate reforms and then conclude an agreement with the International Monetary Fund that would put Lebanon on the path of advancement.

The expert explains - in a statement to Al Jazeera Net - that the circular that asked banks to increase their capital by 20% bears the number 567 and was issued on August 26, 2020, with a deadline of December 31, 2020.

As for Circular 154, it is based on its first article, which aims to establish a comprehensive and fair evaluation of the assets and liabilities of banks according to Fahaili, and on the basis of which every bank must develop a road map for recovery, meaning securing the capital in order to absorb its losses, and then the Banque du Liban takes appropriate measures related to the implementation of its provisions such as merging them Or liquidating them, provided that the status of each bank is studied separately, based on the reports of the "supervision committee" of the 64 commercial banks that incurred huge losses estimated at $ 83 billion.

Yesterday, Wednesday, President Michel Aoun received the Governor of the Banque du Liban, Riad Salameh, and asked him to know the reasons that led to the rise in the dollar exchange rate to these levels, and to inform the Lebanese - to ensure transparency - of the results of the investigation.

Extreme poverty rates in Tripoli have reached more than 70% (Al-Jazeera)

The involvement of the banks

In turn, the analyst and journalist specializing in economic affairs, Mahasin Mursal, does not agree to absolve banks of manipulating the exchange rate of the dollar, and confirms that with the end of the deadline for circular 154, the market began in mid-January and early February to witness a gradual rise in the exchange rate of the dollar, and it was accompanied by a movement Abnormal checks on the black market cycle.

Mahasin Mursal says to Al-Jazeera Net that when searching for the sources of these checks, it became clear that they belong to companies that do not have an old presence in the market, and then it was found that they were accounted for by some banks, which led to unprecedented speculation in the price of checks.

The analyst points out that until now, only the "Lebanon and Overseas" and "Odeh" banks have been able to sell some of their foreign branches to secure the required liquidity, while there are other large banks that have not been able to secure 1% of it and have resorted to the black market.

She said that the collapse of the national currency is accompanied by a network that manages electronic applications that manipulate the exchange rate daily, and it is likely that bankers and major money changers will have a hand in these applications, to control their control over the joints of the black market.

Mahasin Morsal remembers that the Lebanese markets have been almost closed for about two months due to the precautionary measures related to Corona, which means that the import movement will decrease to its minimum limits, and she considers that revealing the source of manipulation of the value of the currency starts from the fundamental question: Who owns the largest monetary block in the Lebanese pound in order to be able to increase Demand for the dollar?

Cashiers take revenge

Away from accusing banks, economic analyst and journalist Imad Chidiac goes to other reasons that led to the high exchange rate of the dollar, foremost of which is the imbalance between supply and demand, considering that the correct question - which reflects the size of the manipulation - is: Why did the dollar remain below 10,000 Lira throughout the past period in light of political and economic hardship?

Chidiac expects that the Banque du Liban resorted, in an undeclared manner, to reducing its support for basic materials by 50% as a result of the shortage of reserves in it, which raises importers' demand for dollars, especially since the political authority refuses to suspend the Central Bank to support commodities for fear of the popular reaction to them.

Chidiac is likely that the money changers will have a fundamental role in the collapse of the currency, especially after the financial judiciary summoned the captain of the money changers' union and his deputy in mid-February with a number of "A" cashiers, and accused them of embezzling money and manipulating the exchange rate, which could push them to further manipulation within Framework for political pressure.

The collapse of the national currency is accompanied by a network that manages electronic applications that daily manipulate the exchange rate according to followers (Al-Jazeera)

The world's poor

The value of the pound began to gradually decline since the fall of 2019, and this coincided with popular protests and political intractability and the subsequent severe liquidity crisis and the reluctance of Lebanese banks to provide depositors with their money in dollars.

In the summer of 2020, the exchange rate of the dollar against the lira reached about 9,800 as a record, but then it returned and retreated, and continued to rise and fall within high rates, and then stabilized in recent weeks between 8 thousand and 8500 pounds, before suddenly jumping a few days ago to more than 9 thousand pounds, to I finally touched 10,000 liras.

Accordingly, Chidiac expects that the dollar exchange rate will remain without a ceiling, with continuous and shocking jumps if a government is not formed and the development of an economic plan to restructure the banking sector hastens.

While some previous monetary estimates went that there were about 10 billion dollars stored in homes after the crisis, the analyst considers that some Lebanese may be enthusiastic about a rise in the exchange rate in order to increase the value of their dollars that they receive from abroad or have, and this is a reflection of the scale and futility of the disaster, as he put it.

 Minimum wage

Finally, the "Information International" study revealed that the salaries of the Lebanese have eroded to record levels, which are among the lowest in the world, with the minimum wage reaching about $ 68, noting that the Lebanese Law 46/2017 set the minimum wage at 675,000, which was equal to 450 dollars according to the official exchange rate. (1507 liras), eventually losing about 84% of its value, and thus salaries in the public and private sectors lost their value.

Many believe that the popular movements in the street are still shy compared to the scale of the disaster, and economist Louis Hobeika expects that the Lebanese will have harsher days ahead of the rise in food prices alone to more than 400%.

Therefore, the country will be - according to Habiba - on a date with a new wave of great inflation after all the foundations of the living balance in Lebanon have been struck, which has become open to all chaos scenarios, security, social, political, economic and living.