Will the Governor of the Banque du Liban, Riad Salameh, continue to sell the dollar, according to an exchange platform, at the price of 38 thousand pounds per dollar, after the volume of his intervention exceeded more than one billion dollars during the past days, especially since the dollar is recording an increase in the parallel market after it witnessed a decrease from 48 thousand to 42 thousand pounds ? Or does he continue to dry up the Lebanese currency to prevent inflation after he lost a large amount of the national currency, knowing that he remains the main player in the parallel market through his circulars and procedures, so he buys and sells according to his needs, conditions, and coordination with the political authority, and thus he is the ruler and controller of the currency market?
Has the Banque du Liban realized that it is now unable to control the exchange rate and the dollar’s decline while it is working on a new dynamic represented in monetary stability, even at a high dollar price?
The expert in banking risks, Dr. Muhammad Fahili, believes that the foreign currency stocks held by the Banque du Liban should be employed in consolidating monetary stability in the country, whether the amount is $500 million or $1 billion. He does not believe that the Banque du Liban’s intervention is to reduce the dollar in the absence of reforms and signs of solutions. Politics and the continuation of economic turmoil, which confirms that any decline in the dollar made by the Banque du Liban will be circumstantial, and the long path of the dollar is an increase, not a decrease.
Fhaili considered that the goal of the Banque du Liban is to secure a kind of monetary stability, even if the price of the dollar is high, because this entails stability in the prices of basic consumer goods and the prevention of price chaos, in addition to creating a kind of confidence, even simple, from the Lebanese citizen in the Lebanese currency, and I imagine that the Banque du Liban succeeded. In the year 2022 in securing this monetary stability on the three axes that I mentioned.
Fahili stated that in December of the year 2021, when Circular 161 was issued, he established the foundations of a new dynamic in terms of managing the monetary mass, monetary stability and the exchange rate, and therefore, the Bank of Lebanon is the decision-maker in any direction the dollar takes, up or down, and to be able to control the dollar’s rise from By controlling the exchange platform, which, with the sharpness of a pen, raised the price of the dollar from 31 to 38 thousand pounds in order to withdraw quantities of the Lebanese currency because it knows that the value of salaries and wages will be greater and does not want any inflationary shifts, just as the banks benefited from the recent action of the Bank of Lebanon because of the large commission it charges As a result of the conversion from the Lebanese pound to the dollar. Fahili admitted that the Banque du Liban is able to circulate the monetary mass in dollars and sell it, then buy and sell it on an exchange platform and buy it in the parallel market through some large exchange offices to collect the dollar at a specific exchange rate to secure salaries, wages and electricity.
Fhaili stressed that the Banque du Liban is the largest player in the parallel market, and it is the decision-maker in the exchange platform, which is the only tool available in the hands of the authority and a plan of salvation for financing operating expenses, and it is the most influential in the economy to manage the exchange rate of the dollar and reduce inflationary pressures. The platform, until this moment, is dedicated to offering (selling) dollars at a price supported by the Banque du Liban and is not a platform for free circulation (supply and demand for dollars).
And that currency printing contributes to the production of inflationary pressures if all of them are employed in moving the economic wheel, and for this reason, the stored quantity should not be calculated as part of the monetary mass when studying and evaluating the inflationary effects of currency printing. For this reason, the Banque du Liban is forced, from time to time, to resort to targeting banknotes stored in pounds when it lifts controls on demand for dollars through an exchange platform (for holders of banknotes in pounds without limits), and stored in fresh dollars by producing an attractive exchange rate for the dollar in the market. parallel. For this reason, an exchange platform must be kept and employed exclusively for the disbursement of salaries and wages, because opening it to banknote holders without limits encourages hoarding, speculation, and causing disturbances in the exchange rate rather than the fluctuations in the exchange rate that are among the expectations.
He secures dollars through compulsory investments, which were previously 15 percent against foreign deposits, in addition to the dollars he gets through his involvement in the exchange market and a quantity of special drawing rights dollars and others.