Chadi Hileneh, “Akhbar al-Yawm” agency

Will the Dollar Be Fixed at 89,000 LBP Under Joseph Aoun's Presidency?

Economic and political conditions for achieving stability

The election of General Joseph Aoun as President of the Republic, and the quick appointment of Nawaf Salam to form a new government, have painted a positive picture on both domestic and international fronts. This optimism raises hopes for a historic shift that could pave the way for necessary reforms aimed at enhancing the national economy’s ability to rise, especially as the Lebanese people look for decisive leadership capable of achieving radical and sustainable change.

Acting Central Bank Governor Wassim Mansouri, in a statement following his meeting with President Aoun at Baabda Palace, reaffirmed the institution’s commitment to maintaining exchange rate stability. Mansouri underscored that speculative trading in Lebanese lira or U.S. dollars to manipulate the exchange rate is ineffective under current monetary policies.

In response to Mansouri's remarks, prominent banking sources confirmed to “Akhbar al-Yawm” agency that while the Lebanese pound's exchange rate does not directly fluctuate with political developments, especially after the presidential vacuum has ended. They noted that all that can be achieved at the start of this new era is to restore a semblance of stability and balance in politics, which should also encompass the deteriorating economic, social, and humanitarian conditions that have persisted for over five years. The focus is now on Lebanon having a president who enjoys significant Arab support, signaling a strong return to the Arab fold and the recovery of its prestigious economic position in the Gulf landscape.

These same sources predict that the central bank will maintain the exchange rate at 89,000 LBP/USD, as any upward or downward movement could cause financial turmoil in the local market. However, before anything can happen, certain economic and political conditions must be met, including:

1. Implementing financial stability with a national policy that directly reflects on the markets.

2. fixing the exchange rate requires legislative approval, which is beyond the central bank's authority and falls under the jurisdiction of the Parliament, as it could subject deposits to cuts, commonly referred to as "haircuts," meaning the "Parliament" would bear full responsibility.

The sources emphasize that the effective value of the exchange rate currently aligns with 89,000 LBP/USD. Banks, therefore, should align deposit settlements with this benchmark while enforcing withdrawal limits to prevent speculative pressures on the parallel market. Success in these efforts will be contingent on the strategic economic agenda set forth by President Joseph Aoun’s administration, which is viewed as a pivotal opportunity to unlock Lebanon's growth potential and reestablish economic resilience.