LebGeeks

Adnan

Member

Re: Lebanese lira to USD exchange

I second this. Some people keep falling for this trap. Smh

rolf

Member

Re: Lebanese lira to USD exchange

Today I received a circulating excel sheet it shows that in just 2 weeks there has been an increase in circulating LBP value from 15.x billion to 16.8 billion. That's ridiculously high for 2 weeks.

Keep in mind that increase in circulating currency might not necessarily be due to the central bank putting more money in circulation.

It may be related to withdrawal of assets from banks due to crisis needs and/or confidence crisis.

On tradingeconomics.com you can see the monetary volumes M0 to M3 for Lebanon (up to last month or so) and you can see that M3 drops as M0 increases, I guess it means that long term depostits, investments and other accounts are being liquidated.

Last edited by rolf (May 18 2020)

NuclearVision

Member

Re: Lebanese lira to USD exchange

Today I received a circulating excel sheet it shows that in just 2 weeks there has been an increase in circulating LBP value from 15.x billion to 16.8 billion. That's ridiculously high for 2 weeks.

Keep in mind that increase in circulating currency might not necessarily be due to the central bank putting more money in circulation.

It may be related to withdrawal of assets from banks due to crisis needs and/or confidence crisis.

On tradingeconomics.com you can see the monetary volumes M0 to M3 for Lebanon (up to last month or so) and you can see that M3 drops as M0 increases, I guess it means that long term depostits, investments and other accounts are being liquidated.

It makes sense,(although the country has been closed these 2 weeks) but whatever the reason is, this is not healthy and could be catastrophic.

beezer

Member

Re: Lebanese lira to USD exchange

Exchanges just being their usual asshole selves.

arached

Member

Re: Lebanese lira to USD exchange

everybody is thinking about their own benefits and how can they profit from the crisis and no one is thinking about the aftermath. And you wonder why Lebanon is still corrupted.

xerxes

Member

Re: Lebanese lira to USD exchange

everybody is thinking about their own benefits and how can they profit from the crisis and no one is thinking about the aftermath. And you wonder why Lebanon is still corrupted.

The problem is that all Lebanese people do not trust the governining parties. they know they are responsible for themselves and if they fall no body will care for them.

and there is not such thing as "watan", we are ourtet nes mjama3een".  it's normal that people act this way.

it's always been this way, always will. Until we truly agree as a community that we want a homeland. starting by a sectarian system

jsaade

Member

Re: Lebanese lira to USD exchange

Trust or think about who exactly?
The exchange rate is being controlled by the government  and central bank and not exchange houses (who are officially closed).
In order for exchange rate to go down, the government and BDL need to formulate a law that allows money transfer to outside of Lebanon at a certain or open rate. The failure in doing so has been causing this variation in USD/LBP rate.
Until that is resolved, merchants need USD to buy items from outside and they will pay you whatever rate to get it. If you do not convert your LBP to USD, these merchants cannot buy USD and cannot get any item from outside Lebanon.

The solution is not in the people's hands.

kareem_nasser

Member

Re: Lebanese lira to USD exchange

Trust or think about who exactly?
The exchange rate is being controlled by the government  and central bank and not exchange houses (who are officially closed).
In order for exchange rate to go down, the government and BDL need to formulate a law that allows money transfer to outside of Lebanon at a certain or open rate. The failure in doing so has been causing this variation in USD/LBP rate.
Until that is resolved, merchants need USD to buy items from outside and they will pay you whatever rate to get it. If you do not convert your LBP to USD, these merchants cannot buy USD and cannot get any item from outside Lebanon.

The solution is not in the people's hands.

If you know how the "peg" was actual maintained, then you will realize that it is not considered a problem if the currency is floating. Many here and online in general have discussed the types of floating the currency.

BDL has been hemorrhaging its treasury to maintain the peg, thus a fake purchasing power we had. Our BOP is huge along with a big trade deficit. This has been going on for decades.

Lighteningbulb

Member

Re: Lebanese lira to USD exchange

Hey all, any idea when exchange shops will open?

VincentKeyboard

Member

Re: Lebanese lira to USD exchange

Hey all, any idea when exchange shops will open?

Hopefully never.
Sadly, they are open in many areas such as Msaytbeh.
A small can of Pepsi is now 2000LL in minimarkets because those people.

rolf

Member

Re: Lebanese lira to USD exchange

Sorry, but I think there are many wrong conceptions in this thread.

- The price of dollars depend on offer and demand. So far the Central bank had manipulated the offer and demand but they do not have the resources anymore to do it (apparently). Their system failed, don't blame exchange shops for trying to fulfill people's need for US dollars, it will only make things worse by making the needed currency even less available and will drive price of imports even higher. It is impossible to realistically force the whole 5+ million Lebanese to exchange US dollars at an official rate. Beside, we do not print Dollars, the only way to get more is to buy them from other countries, and we can't force them to sell them at the price that we want.

- There are people who try to do positive things for the country and there are others who go around complaining that nothing works in this country and take it as an excuse for doing nothing. I would please ask to respect the people who are doing something by not making generalisations (especially insulting).

Last edited by rolf (May 26 2020)

jsaade

Member

Re: Lebanese lira to USD exchange

Hey all, any idea when exchange shops will open?

Hopefully never.
Sadly, they are open in many areas such as Msaytbeh.
A small can of Pepsi is now 2000LL in minimarkets because those people.

This is a bit misleading and mis-informed, the exchange rate is not caused because of exchange houses/shops. They have been closed for a while but the USD to LBP rate is still more than double. This is a political and economical problem. Also caused by the need for USD which is not tackled by any reform plan.
Please stop throwing around blame. Exchange houses did not cause the Lira collapse, our politicians and their lack of planning or work of any kind caused this.

VincentKeyboard

Member

Re: Lebanese lira to USD exchange

Fair enough. But raising the official rate was a horrible idea too.
The current prices are tailored to people getting paid according to the new rate and this neglects people whose salaries are already in LL.

Johnaudi

Member

Re: Lebanese lira to USD exchange

Fair enough. But raising the official rate was a horrible idea too.
The current prices are tailored to people getting paid according to the new rate and this neglects people whose salaries are already in LL.

The fact that they're selling the dollar for more than 4000L.L isn't as worrying as the fact that people are willing to buy it for that price...

jsaade

Member

Re: Lebanese lira to USD exchange

It is based on the need of the people which is not resolved yet. A lot of people simply need USD for their work or to pay bills abroad.
If banks wont sell them they will pay 4000 and more to get what they need.

Tech Guru

Member

Re: Lebanese lira to USD exchange

After the banks presented their alternative bailout plan, and shed light on the deficiencies in the government plan that is being discussed with the IMF, bank administrations at this stage go to arranging the internal house, through procedures that sometimes surprise depositors ...

After the uproar caused by the government plan regarding the method adopted in approaching the issue of estimating losses and distributing them in a manner that threatens the fate of the financial sector as a whole, and the depositors are being unfairly illogical proportions of potential deductions (haircut), it has become clear that this holistic approach will not pass, and that dealing with banks is inevitable On a case-by-case basis, to sort out banking institutions, and to know the true position of each bank, in order to build on what is required.

Based on this reality, the banking departments have started taking measures to fortify their books and prepare the bank to be able to float and continue when the rescue plan that is supposed to lead to exit from the impasse begins according to a clear time schedule.

These arrangements sometimes surprise applicants with regard to what they consider irresistible temptations. The offers offered by banks include the following:

First - negotiate with borrowers to write off their debts in return for attractive discounts, so that the able borrower can pay a certain percentage of his debt, in exchange for writing off the full value of the debt.

Second - converting loans in dollars into loans in pounds, in exchange for setting higher interest rates, based on the difference between interest on the dollar and interest on the pound.

Third - Converting deposits in pounds into dollar deposits, with low interest, against freezing these deposits for periods of time ranging from two years to five years, on the official exchange rate (1507-1514).

Fourth - Presenting attractive offers to employees who approached the retirement age for early retirement, in exchange for additional compensation, which may exceed their compensation if they wait until they reach the legal age.

In addition to these temptations, attempts have been made to create new products based on the principle of increasing the size of any deposit that enters the bank as fresh money. However, these products stopped after the Banque du Liban intervention and prevention.

All these procedures seem to be losing to the banks, and are attractive to the depositor in terms of the benefit that he may achieve as a result of these offers. Why do banks take these steps?

In fact, there is a major cause, and some side causes. However, it should be noted that these procedures are not generalized and standardized among banks. In other words, every bank chooses the procedures that suit it to offer it to depositors. But this does not prevent that the depositor may benefit from these procedures, because the special position of banks at this stage may allow this, as long as there is an intersection of interests between the two parties.

The main objective of banks from exceptional procedures lies in improving and fortifying the internal position of banks, whether in terms of reducing the volume of debts, or in terms of reducing the cost of deposits, (replacing deposits in pounds with dollars), or in terms of increasing interest income on deposits (replacing dollar loans with loans in pounds), or In terms of reducing the operating cost of the bank (reducing the size of the human system through early retirement).

These steps would fortify the bank and put its accounting books in a better position, when each bank starts assessing individually, to determine its fate, whether by enlarging the capital, floating or merging with another bank.

It should be noted that the mass of deposits in lira is not insignificant, which is equivalent to about 30 billion dollars, which means that banks pay annually about two billion dollars in interest on these deposits, while replacing them with dollar deposits, on the low interest rate, may reduce the cost by about one billion And half a billion dollars annually.

In addition, converting these deposits in pounds to dollars, and freezing them for years, will reduce the pressure on the parallel exchange market, so that the percentage of depositors who withdraw their money in pounds per month to buy dollars from the market and store them will decrease. Also, whoever has a large deposit in pounds, may take advantage of the circumstance to convert it into dollars at the official rate, so that he has compensated for the loss of its original value before the dollar's rise. Also, converting large deposits into dollars may cause some to sell even small quantities of dollars to secure their needs, which means offering more dollars in the parallel market, thereby easing the pressure on the lira.

From these facts it can be concluded that the banks that move today in terms of ensuring survival as a priority, give some depositors an opportunity to make up for their losses, or to achieve unexpected gains. In this way, the two sides of the equation come out winners, in principle.

Last edited by Tech Guru (May 27 2020)

Tech Guru

Member

Re: Lebanese lira to USD exchange

Exchange rate  will fall to 3200 LBP / 1$ , but it's a morphine injection for a worser outlook and repercussions.

Was not  possible to protect the exchange rate of the lira by depleting the remaining reserves in the Bank of Lebanon, especially when the current government took a decision last March not to pay Eurobonds for the first time in the history of Lebanon?

Wouldn't paying the  Eurobonds to the banks that would have paid them to the depositors a better plan not to allow the dollar to rise, by securing the dollar through the banks instead of granting them to the money exchangers  who facilitate their delivery outside Lebanon ?!

Was not possible to address the issue of the dollar exchange rate, which is, as a result, a commodity that is subject to the logic of the market, i.e. supply and demand, without securing the amount of dollars needed by the markets?

Was not  possible to protect the price of the lira by consuming the remaining reserves in dollars? And if everyone realizes that it is impossible to secure the required quantities of dollars from within, and specifically from the Bank of Lebanon, then what steps have been taken and taken by the Lebanese government to allow the injection of dollars and hard currency from abroad?

Last edited by Tech Guru (June 14 2020)

potato

Member

Re: Lebanese lira to USD exchange

I guess this decision was made as a final act. Next month it will be worst (i hope not) but whoever seeing things are getting worse but this time no more morphin so prepare for the worst. Food, meds, building supplies, telecom sector, every other sector will start going back years. Venezuela will be even better than lebanon. Im not exaggerating when i say aub or lau may close next year or limit their classes depending on number of students willing to pay upfront.

Last edited by potato (June 14 2020)

NuclearVision

Member

Re: Lebanese lira to USD exchange

analyse what's the best thing to be done, do the opposite, and voilà!

VincentKeyboard

Member

Re: Lebanese lira to USD exchange

I don't follow news but I heard someone saying that a truck smuggling food to a neighboring country was caught today and people are starting to worry about the depletion of the food resources.

jsaade

Member

Re: Lebanese lira to USD exchange

Not sure why BDL is trying to regulate exchange houses and inject USD and force them to use a "new" tracking system.
We already have banks, inject USD into banks and allow people to buy USD from bank, banks already have paper trail and people who are in need of USD for trade/transfers would be able to buy at a very regulated rate.
It seems to me that we are always missing the problem and trying to solve the effects of it.

NuclearVision

Member

Re: Lebanese lira to USD exchange

Not sure why BDL is trying to regulate exchange houses and inject USD and force them to use a "new" tracking system.
We already have banks, inject USD into banks and allow people to buy USD from bank, banks already have paper trail and people who are in need of USD for trade/transfers would be able to buy at a very regulated rate.
It seems to me that we are always missing the problem and trying to solve the effects of it.

if they do that, they can't control the black market, and exchange houses will not be under any obligation.

xterm

Moderator

Re: Lebanese lira to USD exchange

if they do that, they can't control the black market, and exchange houses will not be under any obligation.

Black market by definition is uncontrollable and volatile.

NuclearVision

Member

Re: Lebanese lira to USD exchange

if they do that, they can't control the black market, and exchange houses will not be under any obligation.

Black market by definition is uncontrollable and volatile.

By control I meant attempt to suppress and not control the rate or something, apologies.

infiniteloop

Member

Re: Lebanese lira to USD exchange

A message to shops in Lebanon

We all know that you have difficulties to pay in $ cash to your suppliers, that's why you are using the black market rate and multiply the price to give a LL price (like let's say x4000), then you divide it by 1515 if someone want to pay by USD cards.
Though what you should do is to give the original price in $ for people who are ready to pay in $ cash!
Meaning if you used to sell an item at 100$, nowadays you are selling it at 265$ because you multiplied it by 4000 then divided it by 1515, we could understand this for debit and credit cards but for $ cash you should sell it at 100$

Why?

-Well people are not dumb, they won't pay an item 2.5x more unless it's an absolute necessity, if you keep the same pricing your sales will go to dust and you will be obliged to close your business sooner or later, you have to adapt.
-Making ''offers'' for people who pay in $ cash will encourage them to pay in $ cash, it's a win win situation because you are getting actual USD cash and people who were putting their purchase on hold will be again buy, I am pretty sure there are millions and millions of USD in many houses in Lebanon but people keep them because they prefer to use LL for now as there are no difference in prices.
-These offers must be clear and shown to all, customers don't have to ask every-time for a rebate if paying in USD cash, you should send offers on insta,facebook....or directly in the online shop or showroom.

NB: I am talking about shops not supermarkets, shops like PC,mobile,furniture, clothes....