Al-Gomhoria: The black dollar is out of control…Is there a plan “B” for the Banque du Liban?

Al-Gomhoria: The black dollar is out of control…Is there a plan “B” for the Banque du Liban?
Al-Gomhoria: The black dollar is out of control…Is there a plan “B” for the Banque du Liban?

In fact, control of the dollar has been lost on the black market, as the madness of the dollar is reflected in successive and unprecedented rises in the exchange rate, as between yesterday and today it rose by more than 3 thousand pounds, which created remarkable confusion in the market, which appeared through the record rise in the prices of fuel and bread and in consumer goods prices.

It is true that the successive rise of the dollar on the black market is an expected step, but its record jumps still constitute a surprise that is difficult for the Lebanese to absorb at the same speed at which it is rising. After the exchange rate recorded about 50,000 during the weekend, the week opened with a rise to 51,000, which soon crossed the threshold of 52,000 in the evening. The 55 thousand in the evening.

Are these rapid fluctuations of the dollar an indication of the complete loss of the central bank and its exchange in partial control of the market, especially after the failure of its last intervention that took place at the end of last year, as it did not succeed in calming the market for more than a few days, with heavy circulation that exceeded one billion and 200 million dollars? Or is it a translation of the percentage of the dollar’s ​​rise that it is following, so that the higher the dollar is, the more accelerating its increases will come? For example, if we consider that the dollar increases monthly by 10%, then if its price is 5 thousand pounds, the dollar will increase by 500 pounds, but if the price of the dollar is 50 thousand, then the 10% increase is actually an increase of 5000 pounds per month as a general rate, and if the dollar becomes 100 1,000 pounds will increase by 10,000 pounds per month. Just as it used to happen in the past with commodity prices when the price of the commodity increased by 1,500 pounds, it is actually a reflection of an increase of one dollar. As for today, the 55,000 increase in the price of the commodity from one day to the next is actually an increase of one dollar.

In addition, there are circumstantial factors that in turn affect the exchange rate, either accelerating its rise or slowing its decline more than necessary, just as happens when the Central Bank intervenes in the market through the circulars it issues, or raises the volume of trading on an exchange. However, these factors are purely circumstantial, and do not affect the course of the general exchange rate, which will continue to rise, especially in the absence of any rescue reform plans.

In this context, financial expert Walid Abu Suleiman tells Al-Jumhuriya that there is nothing surprising about the issue of the exchange rate rise in the absence of any rescue plans, and most importantly the loss of confidence in the currency. Today, the Lebanese prefer to own the dollar instead of the pound, which contributes to an increase in demand for it and thus an increase in its prices.

Abu Suleiman attributed the record jumps in the dollar from day to day to the high price of the dollar, so that any increase in it, even by the same upward percentage that was in the past, will appear higher, as a 5% increase on the price of $5000 differs from the price of $55 thousand, even If the percentage is the same.

In addition, the effects of the recent intervention of the Banque du Liban in the market did not last for more than 10 days. Rather, it showed a complete failure, especially when it announced, “The Banque du Liban will sell dollars for pounds without a ceiling on the value of operations, and without conditions.” In fact, individuals and institutions gave pounds to the Central Bank, but until now, no one has received their dollars.

Abu Suleiman said: “It is also noticeable that the Central Bank was unable to approximate the market price on an exchange, unlike the previous time. Today, the difference between the exchange rate and the black market dollar exceeds 15 thousand.

He added, “The Central Bank was working to attract the black market to it, but today it is forced to catch up with the parallel market. It is not excluded, as the exchange rate rose from 31 thousand to 38 thousand at once, that the central exchange rate would rise from 38 thousand to 45 thousand, for example.

Abu Suleiman noted that these rapid jumps of the dollar push the consumer, as well as the merchant, to take preemptive operations to buy the dollar in order to avoid a further rise, thus contributing unknowingly to the rise of the dollar by increasing the demand for it.

Abu Suleiman concluded, “The Central Bank is no longer able to control the market, and it is unable to do anything more than it did in its last intervention at the end of the year. And if he repeats the ball, he will burn more money in the market, and as a result, the dollar will decline for days, then it will rise again to higher levels than before.

the ideal solution?

In light of this blocked horizon, especially towards a comprehensive solution and rescue and reform plans, are there any solutions that the Central Bank can resort to, or what is known as Plan B? Abu Suleiman says that the fastest solution should start from canceling the plurality of exchange rates, including exchange, which represents an artificial price for the dollar. He believed that the best solution to liberalize the currency and float the market is to convert a banking platform into a platform open to the public, through which all individuals can trade, buying and selling. In this case, the actual price of the dollar will appear amid natural processes of supply and demand, and an end to currency manipulation and speculation.

The article is in Arabic

Tags: AlGomhoria black dollar control …Is plan Banque Liban

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