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NuclearVision wroteWhy doesn't the gov enforce the fixed rate or ban usd exchange.
I'm positive that exchangers are just making up these values.
There's no way that usd demand is increasing day after day
Trading disbalance making it.
Let's say lebanon imported goods for last $1000000 in country (gave them away to external world) and sold this stuff on internal market for 1500000000LL, some this stuff also used to produce export to external world.
But your export only $250000.
Now your traders have on market 1500000000 LL and exchanges have money from exporters only $ 250000, for next import.
Your exchange course is 6000 LL/$1 now.
Thats it.
I am sure that some of the demand is speculative. That means people are holding US dollars waiting for the price to increase so that they sell them again
nuclearcat wrote
NuclearVision wroteWhy doesn't the gov enforce the fixed rate or ban usd exchange.
I'm positive that exchangers are just making up these values.
There's no way that usd demand is increasing day after day
Trading disbalance making it.
Let's say lebanon imported goods for last $1000000 in country (gave them away to external world) and sold this stuff on internal market for 1500000000LL, some this stuff also used to produce export to external world.
But your export only $250000.
Now your traders have on market 1500000000 LL and exchanges have money from exporters only $ 250000, for next import.
Your exchange course is 6000 LL/$1 now.
Thats it.
And why didn't this happen in the past 20 years?
NuclearVision wrote
nuclearcat wrote
NuclearVision wroteWhy doesn't the gov enforce the fixed rate or ban usd exchange.
I'm positive that exchangers are just making up these values.
There's no way that usd demand is increasing day after day
Trading disbalance making it.
Let's say lebanon imported goods for last $1000000 in country (gave them away to external world) and sold this stuff on internal market for 1500000000LL, some this stuff also used to produce export to external world.
But your export only $250000.
Now your traders have on market 1500000000 LL and exchanges have money from exporters only $ 250000, for next import.
Your exchange course is 6000 LL/$1 now.
Thats it.
And why didn't this happen in the past 20 years?
Oversimplified - Lebanon was constantly burning remittances, money in bank accounts. They are digits only now.
There was some schemes some "groups" was running, bringing money, they are blocked by sanctions now.
There is no more steady flow of money anymore last 2 years.
There is no floor to how low it can go. Other than that we export very little, the fact that we allow the US dollar to be circulated inside our country makes the lira totally worthless... If given the choice between trusting the US government and trusting the Lebanese government with notes, everyone will intuitively opt for the US dollar...

A weak currency could be a great thing in the long run, and people becoming poor now could be a good thing for the long run I am sorry to say this but... The artificially strong currency has blinded people from corruption, they always felt that the increasing public debt and the corruption all over does not hurt them, now they will see that it hurts a loot, and they will be much more critical. The weak currency will drive us to produce things locally, it will drive us to push for public transportation fixes rather than import 5 billion dollars worth of cars and then another 5 billion worth of petrol...
rolf wroteI am sure that some of the demand is speculative. That means people are holding US dollars waiting for the price to increase so that they sell them again
No, mostly they are afraid to keep them in banks, and many just took out of bank to put under pillow for better times, they think it is bad to invest now. Actually they aggravated situation by removing money from economy and it will turn things to gravely bad very quick.
If decline is too fast... i dont want to scare anybody, but this money under pillow wont be safe anymore.
Also people forgot that money should work, there is no miracle you put large sum in lira and live on miraclously appearing % from bank, i know many lebanese who lived from this.
This % have to appear from something where bank invested, and i dont see any significant profitable businesses who is getting investments from local banks on such amounts and with such profits.
user wroteThere is no floor to how low it can go. Other than that we export very little, the fact that we allow the US dollar to be circulated inside our country makes the lira totally worthless... If given the choice between trusting the US government and trusting the Lebanese government with notes, everyone will intuitively opt for the US dollar...

A weak currency could be a great thing in the long run, and people becoming poor now could be a good thing for the long run I am sorry to say this but... The artificially strong currency has blinded people from corruption, they always felt that the increasing public debt and the corruption all over does not hurt them, now they will see that it hurts a loot, and they will be much more critical. The weak currency will drive us to produce things locally, it will drive us to push for public transportation fixes rather than import 5 billion dollars worth of cars and then another 5 billion worth of petrol...
Weak currency just allows "controlled burn" of accumulated wealth and purchasing power, but there is no miracle in it.
What Lebanon is experiencing right now is called hyperinflation which in economic terms means that prices have increased by 50% . Where as a healthy economy should be around 2-3% per year. It is a very bad thing for poor and wealthy individuals alike. If this continues the central bank of lebanon will have to increase its denomination to cope with the devaluation of its currency just like what happened in the past. The problem is that the Lebanese Pound is considered a fiat currency whereas it is not backed by intrinsic value such as gold,silver... This conclude that its true value is held only by trust towards the government and nothing more and that trust just shattered. Lebanon rely 80% of import which are purchased in foreign currencies to produce goods and sevices hence the demand of USD to import those goods and the inflation in question. A good example would be if a mobile shop want to import an Iphone to sell it here he would buy it from abroad for around 1200$ in which he had to convert 2 400 000 L.L(1$=2000LL) to acquire the 1200$ in the first place. Now the customer who wants to buy the Iphone the true value is not 1200$ rather it is 1584$ if he want to purchase it in Lebanese pound (2 400 000 LL ). If the customer is willing to pay cash in USD then the shop will offer it for 1200$ because he can convert it to 2 400 000LL but most of them will sell you at the official rate which is 1515 to gain more profit(1584$=3 168 000 LL) if you do math it equals to ~43% price increase in LL.
Lebanon does have 286 tons of gold reserves, currently worth $13.6bn. Not enough to pay half of foreign debt, which is around $30bn.
NuclearVision wroteWhy doesn't the gov enforce the fixed rate or ban usd exchange.
I'm positive that exchangers are just making up these values.
There's no way that usd demand is increasing day after day

I already explained before that it's not the exchangers who control the blackmarket prices, I am not claiming it's BDL; in fact I'm sure it's BDL who's selling USD in the black market.

Yes the demand is increasing because of import but think of it. It all started a year ago when BDL started putting restrictions on money coming in USD from outside.

BDL needs money to pay the LBP debts to banks. Banks are getting this LBP from BDL and giving it to you instead of your USD. Plain and simple.

100 million USD was worth 150 billion LBP. It's now worth 200 billions.... 50 billions extra profit from nothing.

That's why they wanna keep the official exchange rate at 1515 just so that the banks won't crash,



Bankmed just sent this :

Dear Cardholder, kindly note that as of Dec 1, 2019 your LBP Debit card will be set for local use ONLY. Cash withdrawal limit is up to LBP 1 million daily and up to LBP 5 million weekly. For international spending apply for a prepaid card in USD or EUR. This is a temporary measure due to the exceptional circumstances prevailing in the country. For more details, call 1270 or visit https://cutt.ly/teBFEJw
I saw a keyboard for 33 $s on a retailer in Mar Elias, Beirut. He wants it @ 2150LL/$, i said no its a keyboard not a kidney.

His excuse "sarrafine 3am yefrmona".
Kareem wrote Bankmed just sent this :

Dear Cardholder, kindly note that as of Dec 1, 2019 your LBP Debit card will be set for local use ONLY. Cash withdrawal limit is up to LBP 1 million daily and up to LBP 5 million weekly. For international spending apply for a prepaid card in USD or EUR. This is a temporary measure due to the exceptional circumstances prevailing in the country. For more details, call 1270 or visit https://cutt.ly/teBFEJw
F*ck ... I called Blom Bank a few days ago and asked them if I could make online payments in USD using an LBP card, and they said yes as long as the payments are international.

So if Blom applies the same policy as Bankmed my card will be pretty much useless to pay for my online services... What a country.
Adnan wrote
Kareem wrote Bankmed just sent this :

Dear Cardholder, kindly note that as of Dec 1, 2019 your LBP Debit card will be set for local use ONLY. Cash withdrawal limit is up to LBP 1 million daily and up to LBP 5 million weekly. For international spending apply for a prepaid card in USD or EUR. This is a temporary measure due to the exceptional circumstances prevailing in the country. For more details, call 1270 or visit https://cutt.ly/teBFEJw
F*ck ... I called Blom Bank a few days ago and asked them if I could make online payments in USD using an LBP card, and they said yes as long as the payments are international.

So if Blom applies the same policy as Bankmed my card will be pretty much useless to pay for my online services... What a country.
I'm BLOM customer since 12 years and even with a USD / EURO card ( VISA SIGNATURE ) I'm not allowed to to spend more than 3000 USD online or 5,000 USD international.

VISA Gold has a limit of 1000 USD online and 2000 USD international.
Adnan wrote
Kareem wrote Bankmed just sent this :

Dear Cardholder, kindly note that as of Dec 1, 2019 your LBP Debit card will be set for local use ONLY. Cash withdrawal limit is up to LBP 1 million daily and up to LBP 5 million weekly. For international spending apply for a prepaid card in USD or EUR. This is a temporary measure due to the exceptional circumstances prevailing in the country. For more details, call 1270 or visit https://cutt.ly/teBFEJw
F*ck ... I called Blom Bank a few days ago and asked them if I could make online payments in USD using an LBP card, and they said yes as long as the payments are international.

So if Blom applies the same policy as Bankmed my card will be pretty much useless to pay for my online services... What a country.
I'm sorry but i don't think this is true, have you actually tried it?
This defies the whole point of Keeping USD inside the country.
You will probably have to apply for a USD card, and use USD bills to top it up to be able to purchase online. I topped my card a month ago, and have a few hundred dollars, I can't even withdraw them...
P.S. Some sites like amazon accept LBP and will enforce their own rate, assuming your card is LBP
NuclearVision wrote
Adnan wrote
Kareem wrote Bankmed just sent this :

Dear Cardholder, kindly note that as of Dec 1, 2019 your LBP Debit card will be set for local use ONLY. Cash withdrawal limit is up to LBP 1 million daily and up to LBP 5 million weekly. For international spending apply for a prepaid card in USD or EUR. This is a temporary measure due to the exceptional circumstances prevailing in the country. For more details, call 1270 or visit https://cutt.ly/teBFEJw
F*ck ... I called Blom Bank a few days ago and asked them if I could make online payments in USD using an LBP card, and they said yes as long as the payments are international.

So if Blom applies the same policy as Bankmed my card will be pretty much useless to pay for my online services... What a country.
I'm sorry but i don't think this is true, have you actually tried it?
This defies the whole point of Keeping USD inside the country.
You will probably have to apply for a USD card, and use USD bills to top it up to be able to purchase online. I topped my card a month ago, and have a few hundred dollars, I can't even withdraw them...
P.S. Some sites like amazon accept LBP and will enforce their own rate, assuming your card is LBP

You are not allowed to issue any new credit card anymore. If you are already a customer and have your card then fine, however if you would like to apply for a new card, they won't accept.

I applied for a charge card in EUR ( credit card limit 0 ) today and Bank of Beirut refused to even discuss it. I even proposed a collateral deposit and the answer was NO. They won't issue any new charge/credit card period.
nuclearcat wrote
user wroteThere is no floor to how low it can go. Other than that we export very little, the fact that we allow the US dollar to be circulated inside our country makes the lira totally worthless... If given the choice between trusting the US government and trusting the Lebanese government with notes, everyone will intuitively opt for the US dollar...

A weak currency could be a great thing in the long run, and people becoming poor now could be a good thing for the long run I am sorry to say this but... The artificially strong currency has blinded people from corruption, they always felt that the increasing public debt and the corruption all over does not hurt them, now they will see that it hurts a loot, and they will be much more critical. The weak currency will drive us to produce things locally, it will drive us to push for public transportation fixes rather than import 5 billion dollars worth of cars and then another 5 billion worth of petrol...
Weak currency just allows "controlled burn" of accumulated wealth and purchasing power, but there is no miracle in it.
I think there would be a miracle in it. People were shielded from much of the pain of corruption, they used to hear that hundreds of millions are wasted here and there and go meh. Now they understand it is their money, they will be more careful and more critical and more active.

Ideally, since pretty much every economist knew since at least 2016 this was coming, the banks should have tightened back then, we could have had a controlled slow devaluation, while we get people to adapt and ramp up local industry and switch gears. The problem is they kept the lie going till the last second and now the collapse is almost uncontrolled... There is no more easy money from government employment and no more easy money from bank interest, the people will have to farm to eat and will have to produce what they need, but time might be short to adapt the economy.
@user, you are correct, I want to add that many institutions knew it was coming, sooner not later.
People when mentioning the rates, mention of you buying or selling.
And it doesn't hurt to mention where you quoted that rate from, as in what region and if you want, the specific shop as well.