Currency calm in crisis: How long can Lebanon keep its exchange rate in check?

Report by Bassam Abou Zeid, English adaptation by Yasmine Jaroudi

Lebanon's exchange rate has remained surprisingly stable despite the ongoing war, holding at around LBP 89,500 to the dollar, the same level recorded before the escalation.

The currency's unchanged rate comes even as the conflict has deepened the country's economic and social crises, raising questions about whether this stability is sustainable and to what extent the Banque du Liban (BDL) is intervening in the market.

Financial dynamics in Lebanon suggest that BDL remains a key player. 

Access to dollars requires local currency, and BDL effectively controls the supply of Lebanese lira in circulation. Its implicit message to the market has been clear: liquidity in lira requires liquidity in dollars and vice versa.

According to available figures, the total money supply in Lebanese lira circulating in the market is relatively limited, estimated at around LBP 68 trillion, or $700 million, making it easier for the BDL to manage compared to the size of its foreign currency reserves.

For now, this controlled liquidity has helped maintain exchange rate stability. However, concerns are growing about the outlook if the war continues.

A prolonged conflict could weaken key sources of dollar inflows. Tax revenues in local currency have already declined, while remittances from Lebanese expatriates—particularly from Gulf countries—could drop. Tourism-related inflows, another important source of foreign currency, may also decrease.

Such trends would likely reduce the supply of dollars in the market while increasing demand, putting upward pressure on the exchange rate.

The key question moving forward is whether the central bank will maintain its current stance or be forced to intervene more directly if pressures on the currency intensify.