Protesters blocked roads again on Tuesday as the lira crashed to new record lows. (Credit: Joseph Eid/AFP)
BEIRUT — The Lebanese lira crashed to a new record low against the US dollar on Tuesday, sending frenzied shoppers to stock up on goods and throwing merchants into disarray, with some shutting down their shops.
The market value of the lira dropped as low as LL15,300 to the dollar Tuesday afternoon, continuing its sharp depreciation after falling to LL11,300 on Saturday.
The situation has prompted multiple supermarkets across the country to close their doors over the past three days as they are unable to price their products, while several shops closed in protest against the lira’s collapse.
“For the first time since 1952, our shop had to shut down as we were unable to price our products,” Jim Haddad, the head of the non-fuel unit at Total, told L’Orient Today.
“Prices have skyrocketed in just 24 hours; I’ve never witnessed that before,” he added.
“The situation is beyond imagination,” said Fadi Barakat, the general manager of Golden Food SAL, a foodstuffs importer.
Last week, senior officials announced a crackdown on exchange shops that “manipulate” the exchange rate and electronic platforms that provide daily updates on the dollar market price.
Such trade barriers decreased the supply of dollars in the market as most exchange houses remain closed. However, some money changers continued to operate under the counter, taking advantage of the situation to increase their profit margins.
In order to restock their products, retailers turn to exchange shops to convert their lira into dollars. To obtain a large volume of hard currency, merchants face no choice but to pay significantly above-market rates to restock their products.
“Money changers are pricing the dollar at LL15,250 for big volumes,” Barakat said earlier on Tuesday, when the dollar was trading at about LL14,300. This increase in the dollar’s selling price will be passed on to consumers.
“No matter the dollar price [money exchangers] ask for, I am obliged to buy,” Barakat added, since most of his merchandise requires foreign currency to import.
“Products at supermarkets are still priced at about LL8,000 to 9,000 to the dollar. If we sell 100 items and collect lira, we can only replace them with about 60 pieces,” said Nabil Fahed, the head of the Syndicate of Supermarket Owners.
Fahed highlighted the potential risk of bankruptcy if supermarkets do not adjust their prices accordingly. “Shops that did not shut their doors might do so in the coming weeks as they face risks of potential bankruptcy,” he said.
His concerns were echoed by Haddad. “We lost about 35 percent of our clientele during the past year as prices soared. No one can afford buying from our boutiques” at the current exchange rate, he said.
Banque du Liban last supplied dollars at subsidized rates to exchangers to cover foodstuff requests on Jan. 15, according to Mahmoud Morad, the head of the Syndicate of Money Changers.
The lira has lost more than 90 percent of its value since the second half of 2019 as Lebanon’s financial system collapsed and authorities, caught in political inertia, failed to address the issue.