LebGeeks

joe2k17

Member

Re: Lebanese lira to USD exchange

Few Points I like to mention ,after some own research to understand what is happening,as i hear too many conflicting theories., and I am not a Financial/Economics  Experts :

Point1:
Here's how much US currency there is in circulation. There is a total of about $1.5 trillion in U.S. physical currency in circulation.
Roughly 80% of this value comes from the 11.5 billion $100 notes. Each year, 70% of new bills are used to replace older notes going out of circulation.
(Ref: https://www.businessinsider.com/heres-h … on-2018-4)

Dividing this number by the value of M2, we see that actual cash comprises a bit more than 10.2 percent of the total money.
This means that almost 89.8 percent of the money in the United States is not in the form of cash.

Point2:
---------
How does bank create Money in Modern World , Also interesting to watch:
https://www.youtube.com/watch?v=b6_SLwR … e=youtu.be

Point1:
A bank can never be able to pay all the money in cash , even if he want to

Point2:
the Main issue that a Good bank should have not borrowed the Government Money , because they know it cannot Pay it back, so the Money was created and may not exist.

.

nosense

Member

Re: Lebanese lira to USD exchange

1880-1900 today

Kareem

Member

Re: Lebanese lira to USD exchange

OK so how can we evade the unofficial illegal capital control imposed by the banks?

In China, cryptocurrency was their way out. In Greece, you were allowed to buy properties outside the country as far as I read.

In Lebanon, the situation is different.... We can't transfer money abroad, we have a very low debit/credit card limit, we can't use cryptocurrency and we're not allowed to invest in anything for the time being except in Lebanon.

Some worrying facts I've been reading :

In October 2019, banks started putting unofficial restrictions on foreign transfers. Earlier in the year, the banks also tried to prevent clients from transferring Lira deposits into US dollars, as since mid-2018 there there had been talk of the Lira being unpegged to the dollar and the debt being unsustainable, with the situation so serious that banks were offering 7.5% to 15% interest on the Lira, depending on how much was deposited. Interest on the dollar was 5% plus. Of course, you don’t get such high interest for nothing, it is due to instability. The problem in Lebanon was, as one ex-minister put it to me, “we keep approaching the edge of the cliff, but the cliff’s edge keeps moving.” Every time there was a scare the situation soon reverted back to seemingly normal. As a result, there was no major outflows of cash or Lebanese stuffing mattresses full of dollars and hoarding gold (although there has always been a fair amount of that; in less stable countries it is always wise to have a sizable stash of physical capital, a lesson I learned in July 2006).

The question now is whether the situation will return to normal, and if the banks will allow transfers and have plenty of dollars again. The banks are certainly doing their best to prevent outflows of cash, as the fundamentals indicate it will not be ‘business as usual’ any time soon. As Capital Economics noted in late October: “In the absence of an IMF deal, the uncertainty over the economic outlook would lead to a bout of capital flight. And the central bank has limited resources with which to mount a defence of the dollar peg. A messy devaluation and default could follow. The IMF estimates that the pound is overvalued by around 50% and that investors in Lebanese bonds could face losses of up to 75%. This would be enough to wipe out banks’ capital and result in severe strains in the financial system. Past experience shows that economies which have suffered debt, currency and banking crises simultaneously have, on average, contracted by 8% from peak to trough.” That is a pretty dire forecast, certainly dire enough to consider getting your cash out of Lebanon ASAP – if you can; Lebanon has also reportedly put restrictions on taking cash and bullion out of the country.

Yet if the situation does stabilize, and clients can actually withdraw funds, where do they transfer their cash? The financial system is very much skewered in favor of the wealthy countries. Digital bank Transferwise for instance, in line with US regulations, only allows dollar transfers from 15 countries into its US account: Europe, Australia and the UAE; Lebanon is not on the list. The same applies to Euros. Lebanese can also not easily open accounts abroad without residency or other legal requirements.

NuclearVision

Member

Re: Lebanese lira to USD exchange

I'm not a finance type of guy, but wasn't it a privilige to be able to buy usd in a country such as ours?

user

Member

Re: Lebanese lira to USD exchange

Few Points I like to mention ,after some own research to understand what is happening,as i hear too many conflicting theories., and I am not a Financial/Economics  Experts :

Point1:
Here's how much US currency there is in circulation. There is a total of about $1.5 trillion in U.S. physical currency in circulation.
Roughly 80% of this value comes from the 11.5 billion $100 notes. Each year, 70% of new bills are used to replace older notes going out of circulation.
(Ref: https://www.businessinsider.com/heres-h … on-2018-4)

Dividing this number by the value of M2, we see that actual cash comprises a bit more than 10.2 percent of the total money.
This means that almost 89.8 percent of the money in the United States is not in the form of cash.

Point2:
---------
How does bank create Money in Modern World , Also interesting to watch:
https://www.youtube.com/watch?v=b6_SLwR … e=youtu.be

Point1:
A bank can never be able to pay all the money in cash , even if he want to

Point2:
the Main issue that a Good bank should have not borrowed the Government Money , because they know it cannot Pay it back, so the Money was created and may not exist.

.

No one is expecting them to pay all the deposits in cash, Our banks have 130 billion dollars in total deposits, and they are on the brink of collpase because 3 billion dollars was withdrawn and they stopped allowing the digital transfer of money to other banks. That is a joke...

The international Basel rules that our banks claim to follow demand that banks own 6% of the money they lend out(that means have them ready for cases like this, anything below 6% reserves and the bank is considered to be in default), and Audi bank claims they have 13% reserve money(in their yearly investor report, which I used to read and get fooled by), and yet when 2% of Audi's money was withdrawn the bank started crying?

Last edited by user (November 21 2019)

NuclearVision

Member

Re: Lebanese lira to USD exchange

Few Points I like to mention ,after some own research to understand what is happening,as i hear too many conflicting theories., and I am not a Financial/Economics  Experts :

Point1:
Here's how much US currency there is in circulation. There is a total of about $1.5 trillion in U.S. physical currency in circulation.
Roughly 80% of this value comes from the 11.5 billion $100 notes. Each year, 70% of new bills are used to replace older notes going out of circulation.
(Ref: https://www.businessinsider.com/heres-h … on-2018-4)

Dividing this number by the value of M2, we see that actual cash comprises a bit more than 10.2 percent of the total money.
This means that almost 89.8 percent of the money in the United States is not in the form of cash.

Point2:
---------
How does bank create Money in Modern World , Also interesting to watch:
https://www.youtube.com/watch?v=b6_SLwR … e=youtu.be

Point1:
A bank can never be able to pay all the money in cash , even if he want to

Point2:
the Main issue that a Good bank should have not borrowed the Government Money , because they know it cannot Pay it back, so the Money was created and may not exist.

.

No one is expecting them to pay all the deposits in cash, Our banks have 130 billion dollars in total deposits, and they are on the brink of collpase because 3 billion dollars was withdrawn and they stopped allowing the digital transfer of money to other banks. That is a joke...

The international Basel rules that our banks claim to follow demand that banks own 6% of the money they lend out(that means have them ready for cases like this, anything below 6% reserves and the bank is considered to be in default), and Audi bank claims they have 13% reserve money(in their yearly investor report, which I used to read and get fooled by), and yet when 2% of Audi's money was withdrawn the bank started crying?

Like i said i'm not a finance oriented guy, but let me tell you, the problem is not with amount withdrawn but the rate of withdrawal... I mean if they lost the 2% you're talking about in a year they won't make a fuss out of it  but in a month or two, it's a huge red flag...

potato

Member

Re: Lebanese lira to USD exchange

You have another issue the owners of the banks and their friends and families you think are restricted like everyone ? we live in lebanon you know so i can assume they are restricting normal people like us from withdrawing our money while they can sleep and feel safe with their money. I say we should find a way and fast to withdraw our $ money some way without them noticing or should i say overcoming their hard game.

Last edited by potato (November 21 2019)

user

Member

Re: Lebanese lira to USD exchange

It was not in a month, people have been withdrawing throughout the year. The last 2 months they barely opened, and when they did open the allowed rate was 1000$ at most with no foreign transfers. BTW if my language seems angry or dry, it's because I am angry at the banks not at you... Reasonable people, not just banks, but reasonable people, diversify their net worth, they own some houses, some cars, some money, some jewelry. Our incompetent lebanese banks halted all investments, all private loans everything, and put it all in the hands of the government. All they own is the lebanese government bonds, which have crashed in prices and are too cheap to sell. I will explain below how bonds work so we all understand each other. But that is mostly why they have nothing to sell to get money and why they owe people more than they have

[how bonds work and the story of our government and banks]

Lets say I want to borrow 1000$ for 10 years, I promise to pay you 50$ a year until I pay it back and you agree. I issue you a bond, the bond is a paper that says "whoever holds this paper shall be entitled to receive 1000$ in November 2029" it also has coupons, like premade checks, of 50$ payments dated for every year from now till 2029(you can only collect them at their dates). So far so good, it all seems safe.
Now lets say I lose my job and I start doing heroin. Naturally you will get nervous. How is a jobless drug addict going to come up with 1000$ in 10 years? So you decide to try and sell the note now to someone else rather than wait, you tell people this note will entitle them to collect 50$ a year every year and then 1000$, and you want to sell it for 1000$. But no one will buy, I am perceived as unreliable. So you lower the price to 500$, now people buy.
From the perspective of the person buying my debt for 500$, he will get paid 50$ a year and then get 1000$ in 10 years. So there is a big reward of potentially doubling his money, but the risk is high. For 500$ people will risk buying that debt, but for more they would not.

Now how does that hurt me? I borrowed 1000$, i will pay 50$ a year, and then I will repay 1000$. From the outside it does not look like the decrease of my debt has a bad impact on me. But if I want to borrow money again, if I want another 1000$, no one will lend me 1000$ for a 5% interest. They will say why should we buy a bond from you that pays 5% when we could buy your old bond on the exchange and make 10% a year and then double our money? (get it? Because my bond that I issued to you is being sold at the cheap, anything new I issue and any new borrowing I try to do has to compete with the shitty price of my old bond)

And this is the Lebanese crisis. The government is now seen as unreliable, the old bonds are trading so low that their interest rate given their reduced price is now around 30%, any new borrowing the government tries to do they have to offer people a 30% interest.

How is this hurting the banks? The banks bought the bonds from the government when the government issued it at its full price. And the banks were holding these bonds for the interest. Now these bond prices fell to almost half their value because the government is now seen as unreliable, so the bank used 1000$ of the depositor's money to buy something that now is worth 500$, the bank has no way of getting the full money of the depositors back unless the time comes and the government repays. The problem is the time on some of these is far, like 2021 and 2029. The other problem is that since our government cannot borrow new money, it might not be able to repay old money.

Depositors want to get out, but the banks are stuck because if they try to sell their bonds they will lose 50% of all the money...

And that kids is why you don't put all your eggs in one basket...

Last edited by user (November 21 2019)

NuclearVision

Member

Re: Lebanese lira to USD exchange

thanks for the great explanation! I am not angry with you and don't think your posts are angry or hateful, I don't have much money in the banks as i'm a student, but I can See what you guys are feeling, your hard earned money...

But let me ask you, why did the banks lend the government, I mean profit is definitely attractive but I don't think
the government had a good reputation at any point since the 90s ....

user

Member

Re: Lebanese lira to USD exchange

It's tricky I guess. Government bonds paid a good interest, if a bank decides not to go heavy on government bonds they will have to give their clients a smaller interest rate. And then depositors would move on to the one giving the bigger rate who is heavy on government bonds... Combined with politicians wanted the banks to keep bankrolling the corruption machine and they made sure regardless of what happens bank interests are paid. If you think about it, the government hospitals and schools are not properly funded, all its sectors are not properly funded, but the one thing the government always funded fully and on time were the interest rates.

But the game got out of hand. Eventually there was not enough fresh money coming in to buy the ever increasing supply of bonds, and the government did not grow its revenues in any real way (we are not exporting anything or attracting any tourists)
Side note, the millions of "tourists" a year is a big fat lie. People who are coming in are 70% Lebanese and Syrians coming home to visit families, they do not use hotels, they do not eat in fancy restaurants. The Khalijis that really pay are maybe 5% of all tourists...

Where I blame the banks is that they should have taken 10% of all that money and set it aside for emergency. They could have bought US government bonds with them, collected 2% interest and called it emergency money. What I expect they did is they bought Lebanese government euro bonds with their emergency money and claimed that we can just sell these if we need to, and of course that did not work out. Too much greed...

Last edited by user (November 21 2019)

Kareem

Member

Re: Lebanese lira to USD exchange

But let me ask you, why did the banks lend the government, I mean profit is definitely attractive but I don't think
the government had a good reputation at any point since the 90s ....

The government didn't have a good reputation true, but BDL promised the banks to stabilize the USD/LBP exchange rate @ 1500 no matter what happens.

This put too much stress on the government because maintaining the exchange rate means foreign currency which means external debts and fresh dollar.

Since no country is willing to lend us money because of our political attitude and situation, and since fresh dollar is almost non existent due to lack of investments and trust in our banking system recently, their only option is to impose strict rules or capital control.

I am also not into economics and I don't know the technical words but IMO this is how it works :

BDL borrowed from banks 60 Billion dollars of which 70% are in LBP; that means 42 billions of dollars in LBP which is equivalent to 63 trillions of LBP at an exchange rate of 1500 LBP/USD.   

So if BDL owes the banks 18 billions of USD and 63 trillions of LBP, the devaluation of the LBP means less debts to BDL.

At an exchange rate of 2000 LBP/USD  BDL will owe the banks 49.5 Billion of USD instead of 60.

So what are they doing ?  BDL is insisting on the official exchange rate to protect the banks... Why?

BDL injecting USD in black market ---> 1 million dollar returns an extra 400 millions of LBP at 1900 LBP/USD --->  BDL paying the banks in LBP --> Banks giving you that money instead of your USD.

No risk. no drama.... Banks are stealing your foreign currency and BDL is doing everything to protect them.

This is the highest level of corruption a government can achieve because everything they're doing is against the law and I'm expecting a guinness world record soon.

BDL has no power and no control over the banks; they are ruling the country economically and last week's strike had nothing to do with the security. It was an objection because of BDL mandating them to increase their capital by 10% before the end of the year and a further 10% before the middle of 2020.

rolf

Member

Re: Lebanese lira to USD exchange

Isn't is weird that fees and limits have been added left and right, but I heard nothing about reducing interest rates? Did I miss something?

infiniteloop

Member

Re: Lebanese lira to USD exchange

1800LL - $ yesterday at ABC
I exchanged Euros to $ at a very good rate here, so if you have a travel to Europe and have some Euros left you can get some $ bonus when you come back

nosense

Member

Re: Lebanese lira to USD exchange

1800LL - $ yesterday at ABC
I exchanged Euros to $ at a very good rate here, so if you have a travel to Europe and have some Euros left you can get some $ bonus when you come back

you got robbed my dude, it was 1880 in beirut yesterday

Kareem

Member

Re: Lebanese lira to USD exchange

1800LL - $ yesterday at ABC
I exchanged Euros to $ at a very good rate here, so if you have a travel to Europe and have some Euros left you can get some $ bonus when you come back

you got robbed my dude, it was 1880 in beirut yesterday

Depends if you're selling or buying....

nosense

Member

Re: Lebanese lira to USD exchange

1800LL - $ yesterday at ABC
I exchanged Euros to $ at a very good rate here, so if you have a travel to Europe and have some Euros left you can get some $ bonus when you come back

you got robbed my dude, it was 1880 in beirut yesterday

Depends if you're selling or buying....

yeah I sold usd for 1880, buying usd was above 1900

rolf

Member

Re: Lebanese lira to USD exchange

I bought Euros in Dora because they would not give me any USD. Rate was 1930 LBP to the USD.
The rates on businessnews.com.lb appear to be accurate.

Last edited by rolf (November 22 2019)

Guitaret

Member

Re: Lebanese lira to USD exchange

I sold 1000$ yesterday to an exchange at the rate of 1860LL.
The thing is that items you buy in the market (supermarket for example) have all increased between 5% & 50% due to the recent USD issue. Weirdly, if you pay in USD at the supermarket you still get affected in the price increase as they value your money at 1507.5LL which is messed up. This is why I am selling my USD in exchange offices (as most people do) and it is increasing the lack of USD in the market as these exchange offices are sending the money outside the country or ripping people off. This shall be solved ASAP and shops should offer better prices for USD payers in order to preserve USD in people's hands.

Kareem

Member

Re: Lebanese lira to USD exchange

I sold 1000$ yesterday to an exchange at the rate of 1860LL.
The thing is that items you buy in the market (supermarket for example) have all increased between 5% & 50% due to the recent USD issue. Weirdly, if you pay in USD at the supermarket you still get affected in the price increase as they value ur money at 1507.5LL which is messed up. This is why I am selling my USD in exchange offices (as most people do) and it is increasing the lack of USD in the market as these exchange offices are sending the money outside the country or ripping people off. This shall be solved ASAP and shops should offer better prices for USD payers in order to preserve USD in people's hands.

Exactly what happened to me. I wanted to buy a 10 pack of cigarettes and the guy told me it's 43,000 LBP instead of 33,000 LBP because of the exchange rate.

I told him but I'm paying $23 which is equivalent to 43K since you're talking about exchange rate. It didn't matter to him, he wanted either 43K LBP or 28.5 USD.

Welcome to Lebanon....

NuclearVision

Member

Re: Lebanese lira to USD exchange

It doesn't make sense, but if you think about it its a good thing, sooner or later people will realize it and start using LBP finally, there will be less demand on usd.

Kareem

Member

Re: Lebanese lira to USD exchange

It doesn't make sense, but if you think about it its a good thing, sooner or later people will realize it and start using LBP finally, there will be less demand on usd.

That's not really the case. I called a mobile store in DT to ask about the availability of the Note10+ S-pen. Price was 35 USD or 66,000LL.

I asked him about the rate, he said it's 1900.

Sorry but I'll pay in USD.

rolf

Member

Re: Lebanese lira to USD exchange

Financial crises happen. When they do, there is a cost to pay, and it has to be shouldered fairly and in a way that preserves social cohesion.

Last edited by rolf (November 23 2019)

infiniteloop

Member

Re: Lebanese lira to USD exchange

It doesn't make sense, but if you think about it its a good thing, sooner or later people will realize it and start using LBP finally, there will be less demand on usd.

That's not really the case. I called a mobile store in DT to ask about the availability of the Note10+ S-pen. Price was 35 USD or 66,000LL.

I asked him about the rate, he said it's 1900.

Sorry but I'll pay in USD.

Or just boycott this shops, I am sorry but 90% of these products were bought months ago way before the USD crisis and these people are trying to steal us, I rather go to another shop who accept a logic rate under 1600 than pay to a thief
And yes if you search a bit you will find honest shop.
If we stop feeding these shops who play with prices they will be obliged to return to normal rates, for example when I wanted to buy a PC monitor pcanparts wanted +50000LL because he raised the $ ratio from a day to another, I said them polity to go *** themselves , I bought the same monitor from Mojitech at the original price in LL, and it was at the 1st week of the USD crisis meaning 100% they bought the screen at the old USD rate

Last edited by infiniteloop (November 23 2019)

Kareem

Member

Re: Lebanese lira to USD exchange

It doesn't make sense, but if you think about it its a good thing, sooner or later people will realize it and start using LBP finally, there will be less demand on usd.

That's not really the case. I called a mobile store in DT to ask about the availability of the Note10+ S-pen. Price was 35 USD or 66,000LL.

I asked him about the rate, he said it's 1900.

Sorry but I'll pay in USD.

Or just boycott this shops, I am sorry but 90% of these products were bought months ago way before the USD crisis and these people are trying to steal us, I rather go to another shop who accept a logic rate under 1600 than pay to a thief
And yes if you search a bit you will find honest shop.
If we stop feeding these shops who play with prices they will be obliged to return to normal rates, for example when I wanted to buy a PC monitor pcanparts wanted +50000LL because he raised the $ ratio from a day to another, I said them polity to go *** themselves , I bought the same monitor from Mojitech at the original price in LL, and it was at the 1st week of the USD crisis meaning 100% they bought the screen at the old USD rate

I don't agree with you. If I paid 100 USD few months ago, I want to collect it today or collect its equivalent.

If the S-Pen price is 35 USD and I pay him 50,000LL instead of 66,000LL and since the banks aren't exchanging money, how do you think he will buy the next stock? Do you expect him to exchange 50,000 LL at 1900 LBP/USD ?

I can't blame the shops for this issue however, the main problem is that some shops are sticking to the rules, pricing in LBP and accepting dollars @ 1515 LBP/USD. This is mainly the dirty game.

Last edited by Kareem (November 23 2019)

Kareem

Member

Re: Lebanese lira to USD exchange

Update : I went to the shop, he said he made a mistake, the S-pen price is $50 not $35... OFC i didn't buy it but honestly this is becoming annoying....

Update 2 : I called Samsung service center, they asked for $33 for the S-pen. So yeah shops are stealing people.

Update 3 : They accepted Lebanese lira and charged me 50,000 LL.

Last edited by Kareem (November 23 2019)