Economists commented on the historic collapse of the Lebanese national currency after the dollar exchange rate reached 10 thousand pounds on Tuesday.

Experts and journalists believed that the collapse was expected as long as the political authority did not take the necessary measures yet. Others interpreted what is happening as part of the general context in the region, and a reflection of regional conflicts.

# The dollar is 10,000 Lebanese pounds,


in practice the minimum wage is only $ 67.5.


Military, judges, civil servants and workers whose salaries have eroded in value as the dollar appreciated.


In Maine, he plays with the dollar, of course, but also the political differences, the failure to form a government, and the failure to carry out reforms, a major crime against every citizen.

- edmondsassine (@edmondsassine) March 2, 2021

"The currency is the most powerful destructive weapon ever," wrote the expert in financial markets, Walid Abu Suleiman.

The currency is the most powerful weapon.

A weapon of massive destruction… #dollar #Lebanon #Lebanon

- walid abousleiman (@wabousleiman) March 2, 2021

For his part, economist Gad Shaaban said, "The strategy of (doing nothing) is bearing fruit: a collapse in the exchange rate that makes deposits lose their value and facilitates the solution for banks, erosion of pensions that reinforces the power of capital owners over employees, and more impoverishment for people to forget their demands."

Shaaban added, "This policy of playing with fire is not without consequences."

The strategy of "doing nothing" bears fruit: a collapse in the exchange rate that makes deposits lose their value and facilitates the solution for banks, erosion of pensions that reinforces the power of capital owners over employees, and more impoverishment for people to forget their demands.


But this policy of playing with fire is not without consequences.

- Jad Chaaban (@JadChaaban) March 2, 2021

 Worse expectations

In the wake of the financial meltdown, activists re-posted a tweet by global economist Steve Hankey, who predicted two days ago that the dollar exchange rate would reach 15,000 Lebanese pounds.

Others recalled some milestones in the history of Lebanon when the price of the dollar jumped in relation to the Lebanese pound, and what this was a reflection on the stability of the country.

The Lebanese pound continues to depreciate against the greenback, approaching its previous record of 10,000 LBP / USD.

Unless # Lebanon's politicians wake up and install a # CurrencyBoard, the pound could suddenly plunge to 15,000LBP / USD.

pic.twitter.com/P3t8q7nC07

- Prof.

Steve Hanke (@steve_hanke) February 28, 2021


 Liquidity crisis

In protest against the unprecedented collapse of the pound, dozens of angry protesters blocked roads yesterday evening with burning tires and stones in several areas, including Beirut, Sidon in the south, Tripoli in the north, and in towns in the Bekaa.

Since the summer of 2019 - and the impact of the worst economic collapse in Lebanon in decades - the pound began to gradually decline against the dollar, coinciding with a severe liquidity crisis and the banks' cessation of providing depositors with their money in dollars.

The official exchange rate is still equal to 1507 pounds to the dollar.

The record decline in the exchange rate comes Tuesday, the day after the Banque du Liban announced the start of reviewing the conditions of banks after the expiration of a deadline set for them to increase their capital, as part of a plan to restructure the banking sector, according to what AFP reported.

In the summer of 2020 circulating, the Central Bank asked banks to increase their capital by 20% by the end of last February.

It was also required to form a free foreign account from any liabilities with correspondent banks abroad of not less than 3% of total foreign currency deposits.

In the event that banks fail to adhere to these standards, their shares will become the property of Banque du Liban.

On Tuesday, local newspapers reported that the acceleration of the lira’s collapse was due to a set of factors, on top of which banks withdrew very large sums of dollars from the market.

"I assure you that the commitment will be almost complete, and the only reason will be to restore confidence, compensate for some losses, and move the economic wheel," said Tanal Al-Sabah, a member of the Board of Directors of the Association of Banks for the island.

As for Marwan Kotb, professor of public finance at the Lebanese University, he told Al-Jazeera: Some banks that have subsidiary banks sold them and were able to secure liquidity, and some banks relied on the parallel market to buy the US currency, which led to an increase in demand for dollars.

Maha Yahya, a researcher at the Carnegie Center, tweeted, "In the meantime, the Lebanese Pound is collapsing more while the political stalemate continues and there are no policies to stop the collapse! Supporting the Lebanese poor who are burdened with inflation is not enough."

The decline in the local currency is reflected in the prices of commodities, foodstuffs, and everything that is imported from abroad.

Commodity prices have increased by 144%, according to estimates by the International Monetary Fund.

More than half of the population is below the poverty line.