Exchange rate lift to shield duty free at Beirut Airport after currency squeeze

By Luke Barras-hill |

Beirut-walkthrough-shop

Approximately 75% of Beirut Airport’s pax base are Lebanese travellers.

Lebanon’s Beirut–Rafic Hariri International Airport has increased the US dollar-Lebanese pound exchange rate at its duty free areas to US$1-LBP2,100 in an attempt to safeguard business as the country tightens controls on dollar withdrawals, TRBusiness can report.

The official exchange rate has historically been pegged at LBP1,507 to the dollar, but the government has in recent months restricted US currency withdrawals across financial institutions, in some cases to less than $500 per month, amid deepening political and economic discontent.

The move has stoked demand for the dollar, simultaneously weakening the LBP and pushing individuals and businesses to use money exchange services with inflated dollar-to-pound rates of up to US$1-LBP2,500 (local market rate).

DUTY FREE EXPOSURE

“This is a challenging situation,” said an industry source close to the matter. “95% of the [airport duty free] products imported are on a foreign currency base, mostly in US dollars. The exchange rate cannot be sustained any less than in the local market.

“Even at LBP2,100, there is still a hit on the bottom line as exchange on the local market is LBP2,500 to get the US dollars to pay suppliers.

“If you look at the local domestic situation, for instance, groceries are in the fortunate situation where they have increased their shelf price in Lebanese currency but the exchange rate to US dollar is still LBP1,507 so you don’t see the increase exchange rate and there is less exposure.

“In duty free you have to display US dollar and Lebanese pricing. If there was the luxury to be able to do purely Lebanese [currency trade] it wouldn’t be so bad. Until the rate in the local market comes down the [duty free] rate will be kept at LBP2,100 and if [the local market rate] increases above LBP2,500 the [duty free] increase will be more than LBP2,100.”

Europe

Heinemann anticipates another €1bn year at IST

Retail has boomed at Istanbul Airport (IST) and the momentum is set to continue this year, even...

Europe

MAN 'very sorry' after power spike cancels flights

Manchester Airport (MAN) Managing Director Chris Woodroofe has issued an apology to passengers...

International

Vantage rebrands as airports manager and investor looks to the future

Vantage Airport Group (Vantage) has announced a corporate rebrand to Vantage Group. The...

image description

In the Magazine

TRBusiness Magazine is free to access. Read the latest issue now.

E-mail this link to a friend