Briefly, the war in Ukraine has mortally combated the Lebanese economy which is suffering from an unprecedented crisis.
Lebanon has been suffering from an inflation crisis for around 30 months as the national currency has lost most of its value and purchase power.
The Lebanese depositors are unable to withdraw except small amounts of their funds from the banks, which has affected all the production cycle in the economy.
Interfering in the local market to curb a further increase in the exchange rate of the Lebanese currency against the Us dollar, the Central Bank decided to sell fresh dollars at a certain rate that prevents the black market from raising prices remarkably.
The pound was trading at 33,000 per dollar before it slid to the average of 20,500 per dollar.
However, this interference has cost the Central Bank more than $1.3 billion, which threatens the mandatory reserves remaining from the depositors’ accounts.
The war in Ukraine has contributed to the increase in the international prices of oil and many other commodities, which means that Lebanon has turned to be in need of more fresh dollars to import its needs.
Since the Central Bank decided to sell the fresh dollars to the private sector importing oil and other commodities, it will be required to sell much more fresh dollars due to the increase in the international prices.
The catastrophic scenario, that the Lebanese are afraid of, is that the Central Bank fails to continue curbing inflation, which would lead to a dramatic increase in the currency exchange rate.
It is worth noting that many economists have said that the Central Bank should have used the amount it is pumping to the local market in order to fund more feasible projects that reduce the repercussions of the ongoing crisis.
On February 24, Russia started a military operation against the extremists nationalists and Kiev regime in order to protect the Russian national security.
Source: Al-Manar English Website
