In reality, control over the dollar in the black market has been lost, as the madness of the dollar is reflected in unprecedented and successive increases in the exchange rate. In just one day, the dollar rose by more than 3,000 lira, creating noticeable confusion in the market, evident through the record rise in fuel and bread prices, as well as consumer goods. While the continuous rise of the dollar in the black market is an expected step, its record jumps remain a surprise that is difficult for the Lebanese to absorb as quickly as it rises. After the exchange rate reached around 50,000 during the weekend, this week opened with an increase to 51,000, swiftly touching 52,000 in the evening. Yesterday, the exchange rate opened at about 53,400 lira, rising to 54,400 at noon and nearing 55,000 in the evening.
Are these rapid fluctuations in the dollar a sign of the complete loss of control by the central bank and the Sayrafa platform over the market, especially after the failure of its last intervention at the end of last year, which did not manage to stabilize the market for more than a few days, despite a trading volume exceeding 1.2 billion dollars? Or do they reflect the percentage increase of the dollar, where every time the dollar rises, its increases become more accelerated? For instance, if we assume the dollar rises by 10% monthly, if it is 5,000 lira, it will increase by 500 lira. If the dollar is 50,000, a 10% rise actually means an increase of 5,000 lira monthly. If the dollar reaches 100,000 lira, it will increase by 10,000 lira monthly. Just as in the past, when the price of goods increased by 1,500 lira, it was essentially a reflection of a one-dollar increase. Today, an increase of 55,000 in the price of goods from day to day signifies an actual increase of one dollar.
Additionally, there are circumstantial factors that can either accelerate the rise or hinder the decline of the exchange rate more than necessary, similar to what happens when the central bank intervenes through the circulars it issues or increases trading volume on Sayrafa. However, these factors are merely circumstantial and do not affect the overall exchange rate trajectory, which will continue to rise, particularly in the absence of any reform or rescue plans.
In this context, financial expert Walid Abu Suleiman told "Al-Joumhouria" that there is nothing surprising about the rise in the exchange rate in the absence of rescue plans. More importantly, there is a loss of trust in the currency. Today, Lebanese individuals prefer to hold dollars instead of lira, which contributes to increased demand and consequently higher prices.
Abu Suleiman attributed the record jumps in the dollar from day to day to the high dollar prices, noting that any increase, even with the same percentage increase as before, will seem higher since a 5% increase at a price of 5,000 differs from a 5% increase at a price of 55,000, even if the percentage remains the same.
Moreover, he observed that the effects of the central bank's recent intervention in the market lasted no more than 10 days and showed a complete failure, particularly when announcing that "the central bank will sell dollars for lira without a ceiling on the value of transactions and without conditions." In reality, individuals and institutions provided lira to the central bank, but until now, no one has received their dollars.
Abu Suleiman noted that the central bank has not been able to align the Sayrafa exchange rate with the black market, with the current difference exceeding 15,000 lira. He added that the central bank used to work to attract the black market, but now it is forced to follow the parallel market. It is also not unlikely for the central bank to raise Sayrafa from 38,000 to, for example, 45,000 – similar to how it jumped from 31,000 to 38,000 in one go.
He noted that these rapid jumps in the dollar prompt both consumers and merchants to preemptively buy dollars to avoid further increases, inadvertently contributing to the rise of the dollar through increased demand.
Abu Suleiman concluded that "the central bank can no longer control the market and cannot do anything more than it has done in its last intervention at the end of the year. If it tries again, it will burn more money in the market and cause the dollar to decrease for a few days, then rise again to higher levels than before."
**The Ideal Solution?**
In light of this deadlock, especially regarding a comprehensive solution and recovery plans, are there any alternative solutions the central bank could resort to or what is known as "Plan B"? Abu Suleiman suggested that the quickest solution should start with abolishing the multiple exchange rates, including Sayrafa, which represents an artificial dollar price. He believes that the best solution for freeing the currency and floating the market is to turn the Sayrafa platform into an open platform for the public, enabling individuals to buy and sell freely. In this case, the actual price of the dollar would emerge amidst normal supply and demand operations, putting an end to currency manipulation and speculation.
