Lira VS Dollar: Where to?


In this graph, various patterns of lira price development against the dollar and subsequent losses are shown. It also shows that these sharp or stable fluctuations in the exchange rate came in conjunction with security developments and conditions. – In the period from July 1982 to the beginning of 1983 (the stage of the Israeli raging and its aftermath), the value of the Lebanese pound improved contrary to what is believed, and there are many explanations about the reasons for this improvement related to the flow of money from abroad.

Click on the graph to enlarge

– In the period from February 1983 until 31/12/1987, the Lebanese pound suffered the largest volume of losses, coinciding with the rise in the value of the dollar. In this period, the price of the dollar jumped from 4.26 pounds to 498 pounds. It took all these losses (indicated in red) to establish the matter on a clear equation in adopting the unit of measurement and consequently the pricing: giving up the Lebanese pound and replacing it with dollars. Of course there were many political and security developments during this period.
– In the period from the end of 1988 to August 1990, the lira returned to improve or at least settle within a limited margin of fluctuations (fragile stability), but rather at an exchange rate that ranged between 400 pounds against the dollar and 771 pounds at the end of the period. However, it is interesting that at the beginning of this period, specifically between the end of 1989 and March 1988, the lira made an improvement, and there are obvious reasons for it. After all these strikes for more than five years, some confidence was restored because the lira’s losses were significant and allowed the entry of new money that financed the purchase of the assets after their prices went down to become undervalued. This is precisely what is happening to restore confidence and this is the pattern that can be awaited in the current wave of sharp fluctuations in the exchange rate.
– In the following period, and for a period of two months (October 1990 and November 1990), the lira improved due to a short-lived “injection” of trust, followed by losses in the lira for three months, and then ended with a ceremony of gains similar to the previous pattern of gains gained due to trust injections that come after a massive deterioration In the political, security and critical situations.
The next wave of losses suffered by the lira was in the period before the late Rafik Hariri came to power. This stage started in February 1992 and until September 1992. After that, the graph clearly shows (the green line) the gains made by the lira, but the exchange rate has reached its maximum or its monthly average of 2527.75 pounds against one dollar.
Of course, these stages can be read in detail in conjunction with political and security developments, but the main thing is that they involve fixed and clear patterns of the high price of the dollar and its fragile stability in the context of trust injections that benefit the owners of funds to buy assets at low prices. Today, the importance of this reading appears to know what awaits Lebanon, the exchange rate of the lira, the price inflation, and who will pay for it. It is clear that we are still at the beginning and it is not clear if there is a capacity or desire to curb these developments and absorb their social and security implications.


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