From dollars to gold: What US interest rate cuts mean for Lebanon

Report by Lea Fayad, English adaptation by Mariella Succar

Even if you don’t have a bank account in the United States, as a Lebanese you will still be affected by a decision to cut U.S. interest rates. Here’s how.

First, when the U.S. Federal Reserve lowers interest rates, the dollar usually weakens against other currencies such as the euro and the yen. If you are holding dollars, their purchasing power decreases compared with other currencies.

Second, with lower rates, investors often turn to more profitable alternatives such as gold and silver, which pushes their prices higher. If you own gold, that could work in your favor.

Third, lower rates in the United States make it cheaper for companies and individuals to borrow, encouraging them to invest and spend more. This boosts demand for commodities such as oil, wheat and other raw materials, driving global prices higher.

Finally, in normal economies, lower rates translate into cheaper loans. In Lebanon, if banking activity fully resumes, loans in U.S. dollars would also become less expensive, since local banks are directly influenced by U.S. interest rates.