Parties cover their electoral costs by manipulating the dollar?!

 Parties cover their electoral costs by manipulating the dollar?!

| Thursday 05 May 2022

Omar Rassi, Akhbar Al Yawm

Despite the fact that there are only 10 days that separate us from the elections, the exchange rate of the dollar remains the main concern of the Lebanese, it was on the black market this morning "between 26,800 and 26,850 Lebanese pounds for a dollar".

It seems that the price, which has stabilized for several months under the ceiling of 23 thousand as a result of the work of the banking platform, has been slipping in recent days, which has caused fear among dealers and their reluctance to sell their dollars on the black market.

A financial source explains that the stability that has prevailed is the result of BDL Circular No. have the right to withdraw, either in pounds or in dollars, according to the limits adopted by each bank, provided that it is in fresh dollars according to the exchange rate on the Sayrafa platform the day before the withdrawal", and thus the BDL's decision to inject dollars into the market and withdraw liras, led to a halt in the deterioration of the lira on the parallel market, and gradually led to the cancellation of the margin between the rate of dollar exchange according to the exchange platform and the parallel market.

However, the source continues: the exchange rate went back up about a month and a half ago, which is not surprising because the parallel market still exists, and the reason is the fundamental problem of lack of liquidity in foreign currency at home due to the lack of capital outflows from abroad.

The source added: Banque du Liban does not claim that Circular 161 and the subsequent decision, is the solution to the problem, as well as the banks, and there is no party who can consider it as the desired solution, but it s This is a topical and temporary measure to curb the deterioration of the lira's exchange rate. Regarding the significant rise recorded in recent days, the source points out that the rise in the exchange rate a week ago is not technical, there were no new factors on the economic reality, demand n neither imports nor any other indicator increased, but what happened is a manipulation of the dollar exchange rate in the parallel market for electoral reasons, because there are parties trying to hedge part of their electoral costs in this way, in addition to the rumor that the banks will cease to operate, add to that the ongoing crisis of confidence. In response to a question, th

e source explains that the drop in transactions on the bank is not due to the drop in demand, but because the BDL secures the demands of banks and financial institutions in installments, that is- that is, the required amount is provided within two or three days. 

We asked: "after the elections what will be the exchange rate?

The source pointed out that the Banque du Liban extended the work of Circular 161 until the end of May, that is, until after the elections, saying: the elections will have an impact on the general context, but I do not expect catastrophic repercussions, pointing out that there is a lot of amplification and intimidation at this level.

We expect to know the situation in the coming weeks.

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