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The Lebanese Lira dropped to an all-time low today on Lebanon’s parallel market.
Although the official rate has recently been increased to $1 = 15,000 LL from 1,507 LL and the bank rate at $1 = 8,000 LL, the parallel market was selling $1 at 92,000 LL – marking an all-time low.
In August 2019, pressure on the fixed exchange rate with the U.S. dollar started, creating a parallel rate in the market.
The two-rate market is a textbook case of weakening Central Bank reserves that are not able to defend the official exchange rate.
Continuous financial pressures driven by unsustainable sovereign debt, high trade deficit, and deposit outflows due to loss of confidence made it impossible for the market to maintain the peg.