And what if the dollar repeated the June 2020 experiment?


Whenever the dollar exchange rate rises on the black market, in-depth analyzes are launched to explore the causes, accompanied by the voices of officials calling for or promising radical measures to stop the collapse of the national currency. But the dollar is hostile to the so-called measures and belies the camouflaged analyzes.
What afflicts us regarding the continued collapse of the exchange rate of the lira on the black market, which is the only free market at present, is similar to what happened to us in the matter of bankruptcy and loss of money in banks. We spent 20 years borrowing periodically from banks and the Bank of Lebanon to fill the budget deficit. We wasted about 35 billion dollars on subsidizing electricity. We paid compensation and pensions that stunned international institutions, including the World Bank, and astonished the “McKinsey” company when it saw the numbers to prepare an economic program for the country. We raised salaries by 100%, and at a price of pounds backed by dollars from the depositors’ money (the series of salaries and salaries) at a time when we had accidentally borrowed with fantastic interest (financial engineering). After all that, we asked, in earnest, where did the money go? we want to know.
The same thing is happening with us today. What is meant by “we” here is the entire political system. I announced the suspension of the payment of Eurobonds dues on March 7, 2020 (today we celebrate the anniversary of a year and a month), without a ready-made rescue plan. The funds of the Banque du Liban were wasted, until they depleted, leaving nothing but the mandatory reserve. The economy was left to its fate, institutions were closed and they are continuing to close. Unemployment and poverty rates have risen to terrifying levels. The size of the economy (GDP) has shrunk to levels almost unprecedented in any country in the world. The state continued spending on the one hand, and indiscriminate subsidies on the other. In parallel with the spending of the reserve in currencies, the spending was done in pounds by means of printing. The monetary mass in lira increased from 2019 to 2020, from 9818 billion liras to 29244 billion liras, an increase of 300%, which, by the way, is the same percentage as the rise of the dollar over the lira during the year 2020.
On the other hand, the formation of the government faltered, and the political horizon seemed completely blocked … After all that, and whenever the dollar rose to a new ceiling, they were stunned, and asked: What is going on? They are quick to take measures that have become a permanent, repetitive and boring recipe: arrest the money changers, close the pricing platforms, and ask the Banque du Liban to take the necessary measures to stop the deterioration of the lira. In parallel, scholars and politicians involved in conspiracy analysis strive to explain the reasons for the rise in the dollar. This considers that Hariri is pressing Aoun, and someone sees the opposite and rumors that Aoun’s team is pressuring Hariri to get him out, and another smells a plot that Hezbollah is weaving to topple the country, and some point the finger of accusation at the United States, which, in its opinion, wants to bring Hezbollah and Iran to its knees through The Lebanese dollar, and the analyzes extend to the limits of the absurd and the absurd …
The only question that can be asked in the current situation: How can we be surprised when the exchange rate of the dollar rises, when the only thing that is supposed to be a surprise is that the dollar exchange rate remains stable for a relatively long period, then only we should be surprised and to analyze, study and search for the reasons.
What is certain is that the lira will continue its declining path, even if it collapses quickly, sometimes slowly, and sometimes it may rise and rise. This is self-evident, and the crash graph can only be up & down.
In a monthly review of the path taken by the dollar’s exchange rate in 2020, it is noted that the graph of the dollar’s appreciation is not organically related to political and regional developments related to Lebanon. By observing the price of the dollar every month in 2020, the following is evident:
January: The dollar opened at 2,100 pounds, and at the end of the month it reached 2150, an increase of about 2%. Although January witnessed worrying developments for Lebanon, the most important of which was the assassination of the commander of the Quds Force, Major General Qassem Soleimani, on the other hand, Hassan Diab’s government had been born and was preparing to gain confidence.
February: At the end, the dollar reached 2,450 pounds, an increase of about 14%. This month the government got the confidence.
March: The dollar rose to 2,750 pounds, an increase of 12%. On March 7, the government announced the suspension of the payment of Eurobonds.
April: The dollar rose to 3,800 pounds, an increase of about 38%. This month, Lazar proposed deducting 61% of deposits above $ 100,000, and protecting the rest of the deposits. The losses (the gap) were estimated at 62 billion dollars, in addition to the deletion of bank capital (20 billion dollars).
May: The dollar rose to 4,100 pounds, an increase of 8%. The government had announced its plan and discussion began.
June: The dollar rose to 9,200, an increase of 125%. This unprecedented rise has not been matched by negative developments that justify it. This month, a national dialogue took place in Baabda, and negotiations continued with the IMF.
July: The dollar fell to 7,650 pounds, a decrease of 22%. Ironically, the month of July witnessed negative developments, including the freezing of negotiations with the IMF.
August: The dollar rose to 7,650, an increase of 1.3%. On the fourth of this month, the Beirut port bombed, and the Diab government resigned.
September: The dollar rose to 8,350 pounds. An increase of 8%. Mustafa Adib was tasked with forming the government, and US sanctions were imposed on the two former ministers, Ali Hassan Khalil and Youssef Fenianos.
October: The dollar fell to 6800, down 22%. Late this month, Hariri was tasked with forming a government. Negotiations also began to demarcate the maritime boundaries.
October 2: The dollar rose to 8,000 pounds. An increase of 18%. The passage of the law to lift banking secrecy was recorded to complete the criminal audit. And US sanctions were imposed on Gebran Bassil in accordance with the Magnitsky Act.
January 1: The dollar rose to 8,400 pounds, an increase of 5%. The country was opened during the holidays, and it received numbers of Lebanese returning to spend the holidays.
In conclusion, it is noted that the average rate of appreciation of the dollar per month was about 25%. It turns out that the dollar rose in February 2021 from 8,800 to 9,600, an increase of 10%, a percentage that does not match its average monthly increase in 2020.
Thus, if it rose by 25% in March, that is, according to its monthly rate of increase last year, it will reach at the end of the month to 12 thousand pounds. Where is the surprise in that? And if he does not do it in March, he may achieve it in April, and no one knows when the dollar will repeat the June experiment, and it will rise 125% in one month.
All that is required of the system is to stop the plays of astonishment, surprise and surprise, and to devote themselves to real treatments that go beyond the ceiling of arresting a cashier or closing a platform.


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