An hour prior to the official announcement of the formation of Lebanon’s new government on Tuesday, January 21, 2020, the Syndicate of Money Changers in Lebanon announced that the fixed exchange rate has now become 2,000 LBP per 1 US dollar.
The syndicate’s announcement came after months of instability in the USD to LBP exchange rate in the local market. However, the efforts of Lebanon’s Central Bank to regulate the price of US dollars in Lebanon’s exchange market with local currency dealers have reportedly not done much.
Since mass protests against the country’s ruling elite erupted in October, the dollar price on this parallel market has soared, hitting as high as 2,500 pounds to the dollar versus an official rate of 1,517 in place since 1997. It has resulted in hiking prices and dramatically shifting absolutely every Lebanese person’s entire financial and professional standings.
Although the official announcement by the Syndicate and the Central bank stated that violators would be subject to unspecified “legal and administrative” penalties, currency dealers in the capital are refusing to comply, according to a Reuters report.
As Reuters reports: “Eight of ten currency bureaus visited by Reuters said they did not have dollars for sale but were willing to purchase dollars at the new price of 2,000 Lebanese pounds. Several customers were seen selling dollars at the new rate. Other dealers said the price control would force the market underground, pushing transactions outside exchange bureaus.”
While two bureaus in Beirut’s Hamra district were selling small quantities of dollars to customers at rates of 2,050 and 2,075, while buying at 2,000, five others were turning customers away, telling them bluntly that there were “no dollars today.”
Naturally, some dealers said the quick decision to impose a price ceiling meant that the dollars they purchased a day earlier at a higher rate of 2,170-2,180 LBPs would leave them with major losses. (Arguable).
According to the Reuters’ report, the currency dealers are reportedly waiting for a “new ceiling” on USD, as it is not “in their best interest” to exchange at the current rate. Do not let anyone cheat you out of your money today.