Banks torched after pound hits new low against US dollar – Economics

The Lebanese pound’s fall against the US dollar to its lowest-ever level, 80,000 to 1, has hurt residents whose local currency savings have been affected by the inflation were decimated, more misery inflicted. The ongoing strike by banks demanding the passage of capital control laws has exacerbated the situation for residents.

Devaluation of the Lebanese pound

According to several local media reports, the Lebanese currency recently fell to a new all-time low of 80,000 per US dollar on the unofficial foreign exchange market. The Lebanese pound’s fall on the parallel market came less than a month after it depreciated by more than 90% on the official market.

Although the currency’s devaluation from 1,507 to 15,000 per dollar was seen as an attempt by monetary authorities to unify the pound’s various exchange rates, some pundits have argued that the new official exchange rate is well below the rates at which most trading takes place.

The currency’s recent collapse, meanwhile, has brought more misery to Lebanese residents, who have already seen the country’s high rate of inflation eat away at their pound-denominated savings. As before by Bitcoin.com News reports, the country’s residents were unable to withdraw their savings after banks froze their accounts.

capital control reforms

To make matters worse, the country’s banks have recently gone on strike demanding the passage of capital movement control laws restricting foreign and local currency withdrawals. The International Monetary Fund (IMF), which struck a bailout deal with the Lebanese government in April 2022, has reportedly required capital control reforms to be implemented before releasing funds.

However, in response to the banks’ move and the recent slump in the pound, Lebanese residents reportedly attacked the closed banking operations. In one Video Shared on social media, angry Lebanese protesters are trying to set fire to the home of the President of the Association of Lebanese Banks.

Nigerian relies on 🔥 and now also in Lebanon. Economic apartheid oppresses entire civilizations, and when that is not enough, currency wars are used to tighten the noose. Humanity rises. The revolution has begun. ✊🏽

— Ray Youssef (@raypaxful) February 17, 2023

On Twitter, some users shared images and videos of burning bank buildings, while crypto enthusiasts took advantage of Lebanese banks’ ability to block customers’ access to funds to highlight the risks of using a central bank-issued digital currency.

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Terence Zimwara

Terence Zimwara is an award-winning Zimbabwean journalist, author and writer. He has written extensively on the economic woes of some African countries, as well as how digital currencies can provide an escape route for Africans.

photo credit: Shutterstock, Pixabay, Wiki Commons, Karim Naamani / Shutterstock.com