General

Watson & Band Import and Export Data Observation reported that, affected by multiple factors such as the continuous sharp interest rate hikes by the Federal Reserve, the currencies of many countries in the Middle East have continued to depreciate significantly recently, and the inflation rate has been soaring, which has had a serious impact on the national economy and people's lives.

According to the observation of import and export data, on the 20th, the exchange rate of the Turkish lira against the US dollar was about 18.31 to 1, a depreciation of more than 50% compared with a year ago, and a drop of more than 35% compared with the beginning of this year.

Lebanon has implemented a fixed exchange rate policy of pegging the Lebanese pound to the U.S. dollar since 1997. The official exchange rate has been kept at about 1,500 to 1, but the black market exchange rate has been falling recently.

According to import and export data, on the same day, the Syrian Central Bank adjusted the official exchange rate of the Syrian pound to the US dollar from 2,814 to 1 to 3,015 to 1, and the local black market exchange rate has reached 4,400 to 1.

Even in Egypt, where the local currency is relatively strong, the Egyptian pound has fallen by more than 20% against the U.S. dollar in the past six months.

At the same time as the sharp depreciation of their currencies, the inflation rate in many countries in the Middle East continued to soar. According to import and export data, the country's consumer price index (CPI) rose 80.21 percent year-on-year in August, hitting a 24-year high. Tunisia's inflation rate rose for 11 consecutive months, reaching 8.6% in August, the highest level in 30 years. Annualized inflation in Israel rose to 5.2 percent in July, the highest since October 2008.

The recent rate hikes by the Federal Reserve are the direct reason for the continued depreciation of currencies and rising inflation in many Middle Eastern countries. In addition, some countries have fragile economic structures or years of war and political instability, resulting in sluggish economic growth and greater vulnerability to external factors.

Currency depreciation and high inflation have had a serious impact on the lives of ordinary people in the Middle East. At the start of the new school year, the once trivial expense of buying stationery for children is now putting a lot of pressure on Turkish parents. "The price of everything has doubled, so we only buy the essentials," said a mother of two.

According to the Import and Export Data Observation report, during the Eid al-Adha festival in July this year, many families in Tunisia had to choose to buy sheep in a group with relatives and friends to barely celebrate the festival. The owner of a pet supply store in Cairo, Egypt, said that the inventory is likely to become less and less, because many of the goods in the store are imported, and with the devaluation of the Egyptian pound, the high cost is unbearable.

Stern, director of emerging market research at Oxford Economics, said that some emerging market countries are at the tipping point of an economic crisis, and "if the dollar appreciates further, it will be the last straw that breaks the camel's back".