But the relevant question here: Is there a reflection of this decline on Lebanon? Yes, of course. Since Lebanon is a fragile country affected by any storm that blows abroad, the drop in the euro was reflected in the Lebanese market, as the “Lebanese charioteer” tried to take advantage of this “opportunity”, in addition to Lebanon’s heavy dependence on imports from European Union countries.
In this context, the economic expert, Professor Pierre Khoury, in an interview with “An-Nahar”, separates between the speculative market and the commercial market.
To explain the first, Khoury clarifies the concept of equivalence. The euro is subject to this principle, i.e. the price of the euro that is traded outside Lebanon compared to the price of the dollar internationally. The euro is a currency whose price is derived from the price of the dollar. Today, the price of one euro in Lebanon is one dollar.
And the rate of 1.02 of the euro once morest the dollar cannot create a black market in Lebanon, but the black market for the euro in Lebanon is derived from the black market for the dollar. For example: if the dollar in Lebanon is 29,000 pounds, the euro is valued at 29,000 pounds plus 2 percent. Therefore, talking regarding a black market for the euro in Lebanon means the black market for the dollar itself, which is not separate from it at all.
When the price of the euro was equal to the dollar, Khoury points out that many people thought that they might deal in the euro because they might price it as one dollar equal to one euro, meaning that it became easier for them to buy the euro, and the impression was made that a large drop in the euro increases the possibility of its rise once more, and “here Playing the mind of the Lebanese speculator, who takes advantage of any opportunity to “share” by buying the euro at a low price and selling it when it rebounds.
As for the commercial market, it is the real market for the euro in Lebanon, especially in terms of imports. Lebanon benefits from the low exchange rate of the euro, because most of its trade is with the eurozone, and any decrease in the currency rate must reduce the price of European imports coming to Lebanon, according to Khoury.
About a year ago, the euro was worth a dollar and twenty cents, which means that with the euro exchange rate, which is now declining, there is a decrease of regarding 17 percent on the value of goods imported from the eurozone.
However, Khoury points out that with the rise in the price of the dollar locally, and the chaos in pricing, it is difficult to seek the impact of the decline in the euro on goods in Lebanon, “We are in a state of price slippage, and the Lebanese market is currently unregulated, and therefore it is difficult to find small differences.”
Most of the goods imported from the Eurozone to Lebanon are daily consumer foodstuffs, especially milk; All milk imported into Lebanon comes from European countries. Also, a large part of the books that are imported for all Francophone schools and universities, as well as machinery for industry, come from Europe.
With the global exit from the Corona pandemic, all countries will restore their economies, according to what the Dean of the College of Business Administration at Saint Joseph University and the President of the International Federation of Lebanese Businessmen and Women MIDEL, Dr. Fouad Zamkahel, explains, in an interview with “An-Nahar”. The surplus of liquidity that was printed by the countries led to their massive inflation, which in one way or another led to the depreciation of the euro.
However, in Zamkahel’s opinion, although Lebanon benefits from the low price of the euro due to its large import from European countries, the deterioration of the price of the lira is greater than the deterioration of the price of the euro. He adds that the global financial crisis will lead to additional inflation in the price of goods, which the importing countries will pay for, including Lebanon, which imports 70 to 80 percent of its needs from Europe in hard currency, “and will therefore witness a significant increase in their prices.”