Eva Abi Haider – Republic
The trading movement on the exchange platform shows a change in the policy followed by the Banque du Liban, which suggests that there is a tendency for the Central Bank to catch up with the black market, and end the differences that are exploited by some to achieve an unjustified quick profit. It was recently recorded an increase in the price of the exchange dollar to 25 thousand and 300 pounds, in a first step of its kind, and comes after its stability for a period between 23 and 24 thousand, as even with the dollar reaching 38,000 pounds on May 27, the exchange rate remained at 24600 pounds, A big difference between it and the black market.
The decisions issued by the Banque du Liban during the last period, especially during every record rise in the price of the dollar on the black market, aimed to reduce it and reduce the margin between it and the price approved in the exchange platform. He succeeded in this, especially after his last circular issued on May 27, in which he called on all holders of the Lebanese pound, whether citizens and institutions, who want to convert it into US dollars, to apply to Lebanese banks, at the price of the “exchange” platform, provided that these requests are fully met. The price of the dollar on the black market fell from 38,000 to 28,000 within two hours.
The success of this circular cost the Central Bank to pump or waste nearly $500 million in the markets from its reserves in order to support the exchange rate on the exchange rate, so during a period of 10 days from the issuance of the circular, it recorded a trading movement of about one billion and 138 million dollars, during which it reached the maximum The circulation of 196 million dollars and 85 million dollars as a minimum, but this movement quickly declined gradually as of mid-June to between 55 million as a maximum and 20 million as a minimum. But in parallel, the exchange rate began to rise from 24,400 pounds during the first 10 days of working with the circular, to 25,300 pounds at last, which suggests that there is a tendency to raise the price of the dollar on exchange to approach the black market price, taking advantage of the tourist season. And what he will bring with him of new dollars brought in by tourists or expatriates, to mitigate at the same time the injection of dollars into the market.
Financial advisor Michel Qazah explains to Al-Gomhoria that, in practice, the price of the dollar approved on an exchange platform is supposed to be closer to the price of the dollar in the parallel market, provided that the difference does not exceed 5 to 10 percent. The big difference that occurs between the black market and the exchange platform is what is known in the financial markets as arbitrage, i.e. the exploitation of the differences to achieve instant profits. He said, “When the exchange platform was available to everyone, everyone benefited by selling dollars on the black market at a high price, and then buying it from the bank at a lower price.” He added: “With this process, everyone was a winner. As for the party that bore the loss, it is the Bank of Lebanon alone, which paid the loss from the mandatory reserve, and to compensate for that, the Central Bank resorted to raising the price of the dollar on the exchange platform.
Qazah did not rule out that the price of one exchange dollar in the coming period would reach 28 or 29 thousand, to join the black market dollar, so that the price between money exchange and the black market does not exceed 5 to 10 percent, pointing out that this is the only way to limit the exploitation of price differences between platform and free market.
Qazah called for banks to return to play their role, which today is limited to selling dollars instead of buying them as well, giving an example of that banks in Turkey that buy dollars at a price higher than that approved by money changers, encouraging tourists to exchange their dollars in banks in this way, the dollar is delivered directly To the bank, unlike the method used in Lebanon, so that citizens resort to exchange on the black market, because the price is higher instead of exchange, and it is strange that money transfer companies are the ones who withdraw dollars in the market and give them to banks instead of banks playing this role.
The dollar is fixed
Concerning the stability of the exchange rate on the black market despite the decline in the exchange movement, Qozh said: “The amount of money that enters Lebanon daily through the airport is estimated at between 25 to 30 thousand dollars, which would ensure stability or balance for the markets during the coming months of July and August.” , warning that this balance will not last long, because these dollars are not spent on production, but on consumption, such as supermarkets, restaurants, fuel… Therefore, at least a third of this money will be reused for importation again, and the second third will be spent inside the country, and the third section is The profit of the merchants who may be smuggled out of the country.”