I used to travel to Lebanon a lot for work, and I used to exchange USD for a much higher rate than the official bank rate. How did those selling the USD at this much better make profits?
In: Economics
ELI5: many Lebanese people do not want lebanese currency, probably because they expect it to have very high inflation. They want dollars. Other people, like you, do want Lebanese currency because you want to buy things in Lebanon. The dealer gives the Lebanese ppl dollars at an exchange rate like 80,000 LBP : 1 USD and gives people with dollars the Lebanese pounds at a rate of 1 USD : 79,000 LBP. Over time the difference in buy sell rates is profit for them.
If your question is why can they trade at a higher exchange rate, or why don’t the Lebanese people get dollars at the official bank rate, the answer is almost always because the bank won’t allow people to trade at that rate. This restriction is what creates the black market dealer.
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