Lebanon Financial Crisis: Banks Torched After Pound Taps New Low Versus the US Dollar

The fall of the Lebanese pound to its lowest level against the US dollar, 80,000 to 1, brought even more suffering to residents whose local currency savings were decimated by inflation. The ongoing strike of banks demanding the passage of a capital control law has exacerbated the situation of 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 in the unofficial foreign exchange market. The fall of the Lebanese pound in the parallel market came less than a month after the fall depreciated more than 90% in the official market.

Although the devaluation of the currency from 1,507 to 15,000 per dollar was seen as an attempt by the monetary authorities to unify several pound exchange rates, some experts argue that the new official exchange rate is pegged well below the rates at which most trade occurs.

Meanwhile, the latest currency drop has accumulated more suffering on the people of Lebanon, who have already seen how the high rate of inflation in the country drains their savings in pounds sterling. As News previously reported, residents of the country were unable to withdraw their savings after banks froze their accounts.

Capital control reforms

To exacerbate the situation for residents, the country’s banks have recently went on strike and require the passage of capital control laws that restrict withdrawals in foreign and local currencies. The International Monetary Fund (IMF), which entered into a bailout agreement with the Lebanese government in April 2022, has reportedly asked for reforms to capital controls before it releases the funding.

However, in response to the actions of banks, as well as the recent fall of the pound, Lebanese people reportedly attacked closed bank branches. One video On social media, angry Lebanese protesters are trying to set fire to the home of the president of the Lebanese Banking Association.

On Twitter, some users shared photos and videos of bank buildings on fire, while crypto enthusiasts used the Lebanese banks’ ability to block clients’ access to funds to highlight the risks of using central bank-issued digital currency.

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