AVOlio
VincentKeyboard wroteOur company accountant claims that the root cause of this dilemma is that it was decided last year that 1500 was a too low price for 1 USD and that it should increase but things got out of hand in terms of food prices. And he feels that the current 8000 is too low still. Who in the right mind thinks that "One" of a foreign currency is worth over a "thousand" of a native currency? Frankly, I am upset at him.
No one individual can decide what is the value of one currency compared to another.
Only the law of supply and demand does.
Just like commodities and items, a currency can also be considered as a commodity.
If your country is a producer of a certain commodity and if people all around the world are interested in buying this commodity that you're producing, then they will go ahead and exchange their own currency to buy our own currency, in order to eventually buy the desired commodity that you are producing.
But since we do not produce anything, and we do not have enough demand for our currency by outsiders, because no one is interested in buying something we produce, then the demand of our currency will be low, therefore it has no value against other currencies.
I kind of agree with the accountant regarding the fact that it was decided a year ago and maybe more that 1500 lbp is very low for a dollar, because I remember many people online, especially here asking for help about their usd loans, where they have been contacted by their banks and they've been told they would get big discounts if they continued paying in dollar and stuff like that.
The banks knew this would happen all along and they tried acquiring their given loans as much as they could.
user
You know, I used to say that Lebanon does not produce anything, but mostly the root cause is we spend a lottt there. Multiple visits between the day3a and the city by car each week if not each day, every person has their own car. In advanced countries we cannot afford that! In Canada you are highly discouraged from getting your own car with high taxes, big insurance costs and complicated licensing. And we simply travel by bus, same bus shapes as in Lebanon, all Lebanon needed to do was created official bus stops and instructions... It's a really dumb problem to have for 30 years.
Traveling each year abroad, also no one does that. In the US and Canada people mostly travel internally, travels to Europe are rare.
Lebanon has a lot of good affordable services, medical care, hotels(I have not tried them personally) we have agriculture with potential to easily expand it. We can expand services now since work is mostly remote to include not only remote software development, but remote private tutoring, remote psychotherapy(fin fact, hourly rate of my therapist over the internet is 130 usd per hour, but he is good and the Lebanese one I tried was shit) remote design. Maybe start a cartoon studio and make cartoons and movies(why not?)
NuclearVision
I would giveaway my car if they make a respectable, safe, timely and hassle free transportation system.
But right now, if i don't drive to work, i will have to take 2 services and 2 buses + wait and spend a lot.
Its cheaper but also easier by car.
I second what Avolio said, as long as we don't produce anything, and begging for hard currency no longer works, our currency is bound to keep losing value.
I read today that the minister of agriculture decided to allow poultry imports, since farmers were not selling their chicken at current prices, it is then that i realized that we always blame politicians, but in fact, the lebanese citizen is the most corrupt.
user
Yes I think as the government gets weaker, people should organize into economic groups by themselves. And really organize well. We can have a private area based digital agricultural market masalan. You can try and hold meetings in your own villages and setup a bus route, and you all agree to hire someone who owns a bus, pay him a fixed rate per month all of you in exchange for him doing 2 trips a day (or 1 trip a day, whatever) things like that.
Imagine being the prime minister, setting up laws, and then the people below you are too corrupt or incompetent to actually practice that law. You're pretty weak at that point.
tech-guru
I will summarize some key points that might be missing , and the repercussions of such decisions.
The last circular No. 573 by which the Banque du Liban imposed on importing companies to pay the amounts due to them to the bank in Lebanese pounds in cash, and not by means of bank checks or transfers, prompting companies and institutions to suspend accepting bank cards and require consumers to pay in cash only. The first of these signs appeared at gas stations, many of which announced that payments through bank cards would not be accepted, in order to obtain cash in pounds, in line with the circular of the Banque du Liban.
As for the decision of the Banque du Liban to set a ceiling for bank withdrawals from it in lira, and to impose fees and interest on withdrawing any monthly amounts exceeding 5 billion pounds for each bank, it prompted the banks to throw the fire ball in the range of banking clients, so the ceilings for cash withdrawals were reduced, to avoid having to withdraw cash from a bank Lebanon surpassed the estimated amount by 5 billion lira. It is evident that the measures taken by the banks to reduce the ceilings of cash withdrawals and limit them to bank cards are reflected in the scarcity of cash liquidity in the hands of citizens.
Away from the objectives of the Central Bank of the circular and the decision, which is summarized by reducing the level of liquidity in Lebanese pounds, and thus reducing the demand for the dollar, and at the expense of deepening the social crisis, the question remains, how will the mechanism of bank withdrawals become? In what cases can bank cards be used?
Many banks have begun to reduce their ceilings for cash withdrawals on dollars and pounds through ATMs, whether for individuals or companies. Among those banks, Fransabank, Bank of Beirut, the Arab Countries, the Lebanese Swiss Bank, the Mediterranean Bank, the Lebanon Overseas Bank and other banks, it is expected that the reduction process will apply to the rest of the banks during the next few days.
The constant in the new procedures is that cash withdrawals on the fund (or countires) in banks will stop completely, whether from the lira or dollar accounts, and cash withdrawals will be restricted to ATMs only. However, according to ceilings that are much lower than what was previously permitted. For example, banks reduced cash withdrawals in dollars (that is, from dollar accounts) to less than $ 1,000 a month. The ceiling is reduced according to each bank, provided that the withdrawal exchange rate remains 3,900 pounds, in line with BDL Circular No. 151. As for withdrawals from accounts in Lebanese pounds, their ceilings are also reduced to less than half, as the ceiling set at most banks does not exceed 2 million pounds per week. .
It is striking that the low ceilings for cash withdrawals include large and small depositors, so there is no differentiation between them in terms of the size of the withdrawals. Likewise, owners of domiciled accounts, public sector employees and members of the security services will have to withdraw their salaries through ATMs, and not from bank funds.
By reducing the ceilings for withdrawals, banks tend to compel customers to use electronic bank credit cards and debit cards in purchases from the Lebanese market. Therefore, banks are expected to transfer the installments of their borrowers from one bank to another according to the requirements, in order to prevent the cash withdrawal from the lira.
The main problem facing the process of using bank cards is to determine the exchange rate of the dollar in bank accounts. Al-Modon learned that a number of banks, including Byblos Bank, allow customers to transfer services from one dollar to one dollar according to the exchange rate of 3900 pounds to the dollar, which facilitates the process of using bank cards in purchases and dispensing with cash, if the commercial institution provides the electronic payment mechanism.
But with the banks that have not introduced the conversion service from dollars to pounds according to the price of the platform, the holders of their dollar accounts must use their cards according to the exchange rate of 1505 pounds to the dollar in purchases priced according to the black market exchange rate for the dollar, and these will almost completely gnaw their deposits.
As for the institutions, shops and companies that refuse to pay through bank cards, the citizen must then dispense with their products, due to his inability to pay in cash, which is what the Banque du Liban targets through its circulars and decisions, i.e. reducing consumption, even if this leads to a hitting the citizen's living capacity and creating more recession.
The objective of the Central Bank of Lebanon through these measures may be achieved temporarily and calm the rise of the dollar. However, this will not succeed in the medium term. All these measures ultimately only lead to more inflation. The Bank of Lebanon has pumped the lira into the market in huge quantities in light of the weak production, and comes today to withdraw the pound, to relieve pressure on it and reduce the dollar. The market is through imported goods, the price of which will be charged in lira in cash. The result will be a vicious circle. The measures will only buy time pending the formation of a government and finding solutions and exits to the crisis.
Similar to the current existence of a cash dollar in the market and a lollar (or bank dollar), a cash lira and a bira (or bank lira) will be introduced. As with the lollar, so is the bira. Their value is between 30 and 60 percent less than the monetary dollar and the pound.
As long as the Banque du Liban imposed on importers to pay about 85 percent of the value of imports in cash, and not through transfers or checks, this means that a difference will occur in prices between the cash and the pound in banks, similar to the difference between the cash dollar and the bank dollar, or what is known as "lollar". I expect that the value of the lira in cash (1 lira) will be approximately 1.25 liras in the bank. Imposing payment on importers in lira in cash would create a sudden and enormous demand for lira in cash, which means that the lira “cash” is no longer equal to that deposited in banks.
It is likely that a banking source will deal in the near term with lira checks, with a discount of between 15 to 20 percent of them, just as is currently the case with dollar checks.
