Local Currency Hits Record Low as Lebanon's Crises Worsen


The Lebanese pound hit a record low against the dollar on the black market on Tuesday as the country's political crisis deepens with no prospects of new Cabinet in the near future and foreign currency reserves dwindle further.

The dollar was trading at 9,975 Lebanese pounds around noon Tuesday. The previous record was registered in July, when the dollar briefly sold for 9,900 pounds on the black market. The official price remains 1,520 pounds to the dollar.

Lebanon has been hammered by one crisis after another, starting with the outbreak of anti-government protests against the country's corrupt political class in October 2019. That has been compounded by the coronavirus pandemic and a massive, deadly blast in Beirut's port last August.

In neighboring Syria — where the economy has been hit by the 10-year conflict, corruption and Western sanctions — the dollar also hit a record on Monday, reaching nearly 3,900 Syrian pounds. The economies of the two neighboring countries are connected and many Syrians have had their money blocked in Lebanese banks that have implemented harsh capital controls.

The massive blast at Beirut's port last August, when nearly 3,000 tons of ammonium nitrate detonated, killed 211 people and injured more than 6,000. Large parts of the Lebanese capital were badly damaged in the blast.

Prime Minister Hassan Diab's government resigned six days after the Aug. 4 blast, one of the largest non-nuclear explosions in history. In October, former Prime Minister Saad Hariri was named to form a new Cabinet but nearly five months later, disagreements between him and President Michel Aoun on the shape of the Cabinet has stood in the way of a new government's formation.

Lebanon has also been in desperate need for foreign currency but international donors have said they will only help the country financially if major reforms are implemented to fight widespread corruption, which has brought the nation to the brink of bankruptcy.

The crash in the local currency will throw more people into poverty. In Lebanon, the minimum wage is 675,000 pounds, or about $67 a month. Before the protests broke out in 2019, the minimum wage was about 450$.

The crisis has driven nearly half the population of the small country of 6 million into poverty. Over 1 million refugees from Syria live in Lebanon.

In December, the World Bank warned that Lebanon's economy faces an "arduous and prolonged depression," with real GPD projected to plunge by nearly 20% because its politicians refuse to implement reforms that would speed up the country's recovery.

In March last year, Lebanon defaulted for the first time ever on a payment on its massive debt amid ongoing popular unrest. Lebanon's debt reached $90 billion or 170% of GDP, making it one of the highest in the world.

Comments 8
Thumb i.report 02 March 2021, 15:53

Reports indicate it could reach 30 000 LBP per USD... Venezuela and Iran style....

Thumb ansarullah 02 March 2021, 16:09

God bless Shia appointed and Protector of Christian rights in the Middle East Maronite President Michel Aoun for insisting on forming a government with unified standards that would implement the necessary reforms. While the local currency is rapidly deteriorating, Our Shia resistance is calling for the adoption of our new digital currency, the MahdiCoin (MC) in all financial dealings and to lessen Lebanon's dependency on the evil U.S dollar. Our motherland, Iran has already started implementing the use of the MahdiCoin in all its financial dealings. Soon, and as a result the currency of the United States will spiral down in a free fall.

Shea Shia Shea !!!

Missing rabiosa 02 March 2021, 17:12

What I would like to know from an economic and/or monetary expert is why is Lebanon still insisting on holding on to the LL? Everything from chewing gum to toilet paper to plane ticket to medical surgery is quoted in USD. Ministers, activists, politicians get on TV and they speak in USD.

So why not ditch the LL and go fully USD as the local currency? Ecuador, Panama, Liberia and maybe a couple other countries when their currencies became worthless they went full USD,

Thumb i.report 02 March 2021, 18:33

The problem my dear is that the USD is becoming worthless as well. It’s a double sentence for Lebanon . 40% of all US dollars in existence have been printed in 12 months.... and it’s really really bad for America as well as other countries relying on dollars. Europe did the same but printed far less money.

Missing rabiosa 02 March 2021, 22:58

Agree, printing money is not the answer. Eventually it will lead to the Weimer Republic, where you'll have to load up wheel barrows full of money to by a loaf of bread.

Thumb lebanon_first 02 March 2021, 18:21


Bad idea.

The worst liability of a country is its public sector salaries. In lebanon, these were huge. By devaluating LBP, they reduce this expense.

Missing rabiosa 02 March 2021, 23:01

Yes the public sector employees and over bureaucracy is what is killing the country. I have said on numerous occasions, the government is too big with endless worthless employees feeding off the government. Ministries should be closed and merged. A lot of government agencies should be dissolved as well. Government subsidies should end too with exception of few. And for god's sake put an end to the crooks known as Currency Exchange as they are Currency Manipultors.

Missing kazan 03 March 2021, 08:35

I believe it is a cause and effect situation;the currency exchange rate is the effect of inflation, which means that if the LB is 400% lower, it is caused by a 400% increase in the price of consumer goods. this also explains the price increase of the same items in dollars; of course the supply and demand of LB also plays a role.