Protesters block streets with burning tyres and dumpsters following the currency fall that traded at nearly 10,000 pounds to US dollar in black market.

A demonstrator clad in mask coloured with the Lebanese flag reacts as she stands next to flaming tyres in Beirut late on March 2, 2021.
A demonstrator clad in mask coloured with the Lebanese flag reacts as she stands next to flaming tyres in Beirut late on March 2, 2021. (AFP)

The Lebanese pound has hit an all-time low against the dollar, prompting angry new protests over a deepening economic crisis that has thrown more than half of the population into poverty.

The pound had been pegged to the dollar at 1,500 since 1997, but the country's worst economic crisis since the 1975-1990 civil war has seen its unofficial value plummet.

On Tuesday, it was trading at nearly 10,000 pounds to the dollar in the black market, money exchangers told AFP news agency.

"It's crazy what's happening," one money exchanger said on condition of anonymity.

In the evening, dozens of protesters blocked off roads in Beirut and other parts of the country, some of them burning tyres.

"What is happening is unacceptable... People need to revolt," one protester told a television channel in the capital.

Dizzying depreciation of currency 

There were also demonstrations in the northern city of Tripoli, Saida in the south and in the eastern region of Bekaa.

Before the latest downturn, the pound had briefly stabilised at 8,000-8,500 to the greenback in recent weeks.

In July, it had reached 9,800 to the dollar.

The dizzying depreciation came as the central bank started reviewing Lebanon's lenders, under international pressure for reform.

As part of a series of demands, it had given them a Sunday deadline to increase their capital by 20 percent.

No functional government

On Monday, a central bank committee "agreed on a roadmap with deadlines for the Bank of Lebanon to take appropriate measures" if these requirements were not met, it said in a statement.

Lebanon's Al Akhbar newspaper said on Tuesday that the currency plunge was partly the result of commercial banks sucking dollars out of the market to meet the capital demands of the central bank.

The slide in the value of the pound has led to soaring food prices in a country where more than half of the population now lives below the poverty line.

Lebanon has been without a fully functioning government since outgoing premier Hassan Diab resigned in the wake of a devastating explosion in Beirut port last year. 

The blast killed more than 200 people and piled new misery on a country already brought to its knees by the economic crisis.

In October, former prime minister Saad Hariri was named to form a new Cabinet but nearly five months later, disagreements between him and President Michel Aoun on the shape of the Cabinet has stood in the way of a new government's formation.

READ MORE: Lebanon appoints new lead investigator in port blast probe

Minimum wage at around $67 a month

"They've driven us to begging, they're starving us," one protester said.

"We've been sitting at home for ages, then there was the port blast, and they haven't formed a government. We've had enough of this ruling class."

People are hungry, prices are flying and there is no electricity," tweeted Lebanese business writer Hala Saghbini. "We want a government immediately. Enough humiliation of the people."

The crash in the local currency will throw more people into poverty. In Lebanon, the minimum wage is 675,000 pounds, or about $67 a month. Before the protests broke out in 2019, the minimum wage was about $450 per month.

Knock-on effect in Syria 

The crisis has also had knock-on effects on neighbouring Syria, whose currency also hit a record low on Tuesday, compounding the economic catastrophe caused by a decade-long civil war.

The exchange rate reached 4,000 Syrian pounds to the US dollar in Damascus.

"What's happening in Lebanon is affecting the Syrian pound because Lebanon is one of the main channels for the Syrian government to the external market," analyst Zaki Mehchy told AFP.

But he noted that this was just one factor for the Syrian pound's drop in value on the black market.

Parts of Syria controlled by the government, under Western sanctions, have long relied on Lebanon as a conduit for dollars.

READ MORE: Beirut blast worsens financial, health conditions for Lebanese women

Warnings of more protests

Lebanon was rocked by mass protests in 2019 against a political class deemed inept and corrupt, but those demonstrations largely petered out after the coronavirus pandemic arrived in the country.

Maha Yahya of Carnegie's Middle East Centre said Lebanon's political leaders had prevented an economic rescue plan from taking shape.

"#Lebanon's Lira (pound) collapses further – political deadlock continues and no policies to stem the collapse!" she tweeted.

She warned that the falling pound could "trigger wide spread protests, violence & significant breakdown in law & order."

READ MORE: Syrian refugee camp in Lebanon set ablaze after altercation

Source: TRTWorld and agencies