You don’t have to explain how currencies work, though I’d appreciate it! My main question though is, why do Lebanese people need dollars? why does it matter if it’s 1 usd or 7000 Lebanese Pounds if it’s the same value? I hope my question is clear. I’ve been hearing that months ago $1 was like 2500 LP, but now due to the recession, it’s 7000, which means it’s bad…but why? How does that make things more costly? I know it means the $ is stronger, but how is that bad in terms of money transfers? If an international money transfer of $1 is given to the local receiver in Lebanon as $1 or as 7000LP, isn’t it the same thing? Why do Lebanese people ask agencies like Western Union to issue their money in US bills?
In: Economics
There are a few things going on here, and I won’t bore you with all the politics and such, but the core of it is that their money is devaluing quickly for several reasons.
Basically, the difference in value to USD is a useful metric of the LP’s decreased buying power. The LP didn’t go down to 7000/1 USD, but a gallon of milk still only cost 20 LP, the actuall prices of things ( like food) are skyrocketing as well.
People want USD when they can get it because it’s value is considered relatively stable. You could get 20,000 LP today, but by tomorrow it’s buying power, its “real value” might be half what it was yesterday. But those sweet greenbacks will still be worth something, maybe even more as demand for them goes up.
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