Lebanese Eurobonds, which have plummeted in value since the onset of the financial crisis, are experiencing successive price jumps amid speculation that the Lebanese government may be planning to purchase these bonds. The price saw a notable increase of 0.15 cents over the past week, rising from 6.85 cents per dollar at the end of the previous week. This sudden surge raises questions about whether these increases reflect any substantive positive developments.

LIMS asserts that it is highly improbable that the Lebanese government intends to buy Eurobonds, even at their current heavily discounted rates. If the government were to start purchasing these bonds, their price would rise sharply, likely leading the government to halt the buyback due to escalating costs. Moreover, the government lacks the financial resources to repurchase the bonds unless it resorts to using the central bank’s foreign exchange reserves. Such a move would effectively reward bondholders at the expense of depositors, exacerbating the already strained financial situation.

The recent price movements of Lebanese Eurobonds, driven by speculative rumors, underline the precarious nature of the country’s financial landscape. Without concrete economic reforms, these price fluctuations are unlikely to signify genuine improvements in Lebanon’s economic stability.

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