Lebanon Pound's (LBP USD) Imploding Peg Hurts National Economy - Bloomberg:
At a small cafe in the south Lebanese village of Ain Ebel, customers once indulged in drinks and lingered for hours puffing on water pipes filled with aromatic tobacco. Now, most go for a quick shot of espresso in a paper cup.
“It’s the only thing that’s still 2,000 pounds,” said Ibrahim Sader, the 32-year-old owner. “Everything else is now more expensive.”
Lebanon’s worst economic crisis in decades has already cost thousands of jobs, with unrest stirring again on Saturday as protesters lashed out at the government’s response. The depreciation in the pound is driving up prices, hitting disposable incomes and forcing many Lebanese to rein in the free-spending lifestyles they’d become accustomed to. Many now talk in terms of their lives before the currency crisis -- foreign holidays and shiny cars -- and their modest new reality.
By tethering the exchange rate to the dollar for over two decades, Lebanon effectively subsidized imports from wheat and fuel to luxury goods and vehicles, allowing Lebanese to enjoy lifestyles that would other
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