The value of the Lebanese currency ( the Lira ) against the US dollar dropped again to an unprecedented level on the black market on Friday , when it traded at LL 35,500 to the dollar.
According to experts , as long as the situation remains the same, the price of the dollar will continue to rise against the pound and there is nothing to stop it.
The Lebanese pound was pegged to the dollar at a rate of 1507.5 LBP to the dollar and until 2019 the dollar was trading at about 1500 LBP .
The wages of the majority of people in Lebanon are paid in Lebanese pounds , the drop to 35,500 means they have lost over 95% of their income , while at the same time inflation is an all time high in Lebanon since goods are priced at the black market price of the pound .
Is dollarization best option ?
Dollarization is the term for when the U.S. dollar is used in addition to or instead of the Lebanese currency . It is an example of currency substitution. Dollarization usually happens when a country’s own currency loses its usefulness as a medium of exchange, due to hyperinflation or instability.
In light of the continued collapse of the Lebanese currency, some are suggesting that the dollarization of the economy may be the best option to revive the country’s financial system.
Until the October 2019 uprising the economy was dollarized . The dollar was worth exactly 1500 Lebanese pounds and people substituted both currencies on regular basis . Back then there was no black market for the Lebanese currency
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