Lebanon, Iran, Egypt and Iraq fail to avoid devaluation
The situation in the 4 Middle Eastern countries where the local currency depreciated the most is not bright.
People who live in countries where production is low and imports are high, such as Lebanon, Egypt, Iraq, and Iran, are directly affected by these severe fluctuations in the dollar exchange rate. In Lebanon, where many products, such as food and clothing, are priced according to the dollar exchange rate, prices can increase even during the day.
1 DOLL IN LEBANON INCREASED FROM 20 THOUSAND LIRA TO 55 THOUSAND LIRA
In Lebanon, where a deep economic crisis has been going on since 2019, deposit accounts in dollars in banks were frozen to prevent the melting of foreign currency reserves.
Events such as the anti-government demonstrations that began in October 2019, the resignation of the government, the Beirut port explosion, and the Covid-19 outbreak deeply affected the Lebanese economy. While US$1 traded at 1,500 Lebanese lira in 2019, the depreciation of the lira began to increase simultaneously with successive events.
While 1 US dollar was 20,000 Lebanese liras in January 2022, it is currently trading at 55,000 liras on the black market and exchange houses. The Lebanese lira is seen to have lost approximately 150 percent of its value over the past year.
To prevent the depreciation of the Lebanese lira, only a preliminary agreement was reached in ongoing negotiations between the Lebanese government and the International Monetary Fund (IMF) for a “$3 billion” loan. Negotiations between the IMF and Lebanon have not yet reached a final conclusion.
In addition to the slow progress of negotiations with the IMF, serious “corruption investigations” are also on the agenda against Riyad Salame, president of the Lebanese Central Bank, which is an important institution when it comes to the dollar/lira exchange rate in the country. .
A lawsuit has been filed against Selame on charges of “money laundering and embezzlement” both in Lebanon and in some countries in Europe.
IRAN’S MONEY IS FALLING
According to information released by the Iran Statistics Center on January 21, the prices of goods and services in the country increased by 51.3 percent in the period from December 22 to January 20 compared to the same period. from the previous year.
Although this rate was 70.1 percent in food prices, among the products with the highest price increase, oil ranked first with a rise of 250 percent. The inflation rate of the last 12 months in the country was determined at 46.3 percent.
The local currency depreciated 10 percent in the period from November 21 to December 21, 2022, amounting to 1 US dollar 41 thousand divisions. Currently, 1 US dollar is trading at the level of 45,250 rials.
Since Chairman Ibrahim Reisi took office on June 19, 2021, the division has lost 75 percent of its value against the dollar.
RELEASED PRESIDENT OF THE CENTRAL BANK OF IRAQ
The Iraqi dinar is also among the currencies that have depreciated rapidly against the US dollar.
Although the Central Bank determines 1 US dollar as 1470 dinars, 1 US dollar finds 1650 dinars in the market. The fluctuation of the dollar/dinar exchange rate in Iraq also increases the prices of products on the shelves.
Due to this fluctuation in the exchange rate, Iraqi Prime Minister Muhammed Şiya es-Sudani removed Central Bank Governor Mustafa Galip Muhlifi on January 23 and appointed Ali Muhsin Allak as his proxy.
After the replacement of the Governor of the Central Bank, 1 US dollar was reduced to 1160 dinars. Within the framework of the packages announced by the government, he began to sell chicken, flour and eggs to the public at cheap prices. It is claimed that this decision is aimed at poor families.
After this small decrease in the exchange rate after the change in the tariff at the Central Bank, the exchange rate rose again in a short time. While the Central Bank of Iraq sets the exchange rate at 1,470 Iraqi dinars per dollar, 1 US dollar trades between 1,590 and 1,620 dinars on the black market and the free market.
While the government started selling cheap chicken, flour and eggs to the public with the packages it advertised, these decisions are aimed at supporting poor families.
HISTORICAL DECREASE IN THE EGYPTIAN POUND
The Egyptian lira experienced a historic drop against the US dollar, depreciating around 51 percent since March 21, 2022.
The Egyptian local currency has not been a parallel market in the country since November 2016, although the exchange rate is going through a volatile period these days. Witnessing a historic drop, the Egyptian lira is trading at 29.91 against the US dollar.
As the Egyptian lira depreciated 74.7 percent in 10 years against the US dollar, the Central Bank of Egypt met with managers of banks operating in the country on November 28, 2022 to overcome the shortage of currencies and prevent foreign investors from leaving. . (AA)
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.