The election of Joseph Aoun as Lebanon's new President, followed by the swift appointment of Prime Minister-designate Nawaf Salam to form a new government, has sparked optimism both domestically and internationally. This renewed hope presents the possibility of a historic shift, potentially paving the way for the much-needed reforms that could strengthen the national economy and boost its recovery.

In a statement made earlier this week after his meeting with President Aoun, Acting Governor of the Banque du Liban, Wassim Mansouri, stressed that the central bank’s policy will focus on maintaining the stability of the Lebanese pound’s exchange rate. He addressed the misconception that selling Lebanese pounds or dollars could lead to immediate or long-term profits or influence the exchange rate, clarifying that such actions would not have the desired effect.

In response to Mansouri’s remarks, banking sources told the Akhbar al-Yawm news agency that the Lebanese pound’s exchange rate is not directly affected by political developments, especially after the conclusion of the presidential vacuum. The sources indicated that, for now, the primary achievement of this new presidential term would be the restoration of political stability and balance. This, in turn, would have a positive impact on the country’s long-declining economic, social, and humanitarian conditions, which have been deteriorating for over five years.

With the election of a president who enjoys significant support from the Arab world, there is growing optimism for Lebanon’s reintegration into the Arab sphere and the restoration of its prominent economic position in the Gulf region. The country is now seen as having the potential to rebuild its ties with Arab nations and reclaim its influential status on the economic map of the Middle East.

The banking sources also predict that the central bank will likely peg the Lebanese pound’s exchange rate at 89,000 pounds to the dollar. Any significant fluctuation in the exchange rate, they warn, could lead to financial instability in the local market. However, to stabilize the exchange rate, certain political and economic conditions must first be met.

Firstly, establishing financial stability through a national policy that directly impacts the markets is crucial.

Secondly, the stabilization of the exchange rate will require the passage of a law that falls under the jurisdiction of the Lebanese Parliament, not the central bank. This law could involve the imposition of a "haircut" on deposits, thus placing responsibility for such measures squarely on the shoulders of Parliament.

The sources concluded by stating that the actual value of the Lebanese pound’s exchange rate is 89,000 pounds to the dollar. Therefore, banks must adjust their practices to ensure deposits are paid out based on this rate. Additionally, to prevent further depreciation in the parallel market, withdrawal limits may need to be set.

The success of these measures and the stability of Lebanon’s economy will largely depend on the new presidency under Joseph Aoun, which many hope will usher in a period of growth, prosperity, and much-needed reforms for Lebanon.