What impact would lifting of gasoline subsidies have on dollar exchange rate?-[REPORT]

News Bulletin Reports
2022-08-18 | 10:26
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What impact would lifting of gasoline subsidies have on dollar exchange rate?-[REPORT]
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What impact would lifting of gasoline subsidies have on dollar exchange rate?-[REPORT]
It seems that the Banque du Liban would completely free Sayrafa exchange platform from the burdens of financing the import of gasoline.
 
Yet, $180 million is the monthly need of the Lebanese market for gasoline.
 
Initially, BDL secured this amount at 100% of the mandatory reserve at Sayrafa exchange rate. But later, this support was cut to 85% at Sayrafa rate, and the remaining 15% was secured on the basis of the black market dollar exchange rate, which means that $27 million out of the original 180 million was done so.
 
However, the percentage of dependence on the black market has increased to 30% now, compared to 70% on the basis of Sayrafa, doubling the amount of $27 million and making $54 million the need for companies importing from the black market every month.
 
Moreover, since oil-importing companies work 22 days a month, a simple arithmetic operation shows that these companies need every working day to increase one million and 200 thousand dollars that they secure from the black market, so that the daily need of dollars for the importing companies becomes two million and 400 thousand dollars.
 
Furthermore, reducing the BDL’s ability to secure gasoline dollars is a prelude to completely removing subsidies from this article, meaning that the goal in the near future is to calculate the price of gasoline at 100% on the basis of the black market exchange rate, and this is actually what is gradually being worked on.
 
Thus, this step will increase the demand for dollars on the black market, which will inevitably lead to the continued appreciation of the dollar exchange rate significantly against the Lebanese pound.
 
On the other hand, if the Central Bank stops securing dollars for gasoline and that the latter is secured through the black market, this will contribute to maintaining the mandatory reserve of BDL, that is, depositors' money, meaning that we have two options, the best of which is bitter.
 
 
 
 
 
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