Lebanese Pound Drops to Historic Low Against US Dollar
The Lebanese pound on Tuesday sank to a new historic low against the US dollar on the parallel market, trading at 45,000 pounds to the dollar, the Elnashra news website reported. The previous record low, reached on October 14, was 40,000 pounds to the dollar.
The parallel currency market, also known as the black market or informal market, is an unofficial market for the exchange of currencies. It operates outside of the formal financial system and is not regulated by the government or central bank. The exchange rates in the parallel market are determined by supply and demand rather than official monetary policy.
The overprinting of Lebanese pounds to finance the budget deficit is the main cause for the pound’s drop in value, according to Patrick Mardini, president of the Lebanese Institute for Market Studies. “People are using this local currency to buy the US dollar, which is leading to an increase in the demand on the foreign currency and the rise in its price,” Mardini said. This trend, he added, is expected to continue.
The International Monetary Fund has offered Lebanon billions of dollars in aid to put the country on a path to economic recovery., on condition that it implements painful austerity measures and reforms.
