Lebanon Central Bank Sets Dollar Price for FX Dealers at 3,200 Pounds

Published April 27th, 2020 - 07:00 GMT
Lebanon Central Bank Sets Dollar Price for FX Dealers at 3,200 Pounds
Diab on Friday cast Salameh as responsible for a currency crisis that has threatened to further destabilize a country already in dire financial straits. (Shuttertsock)
Highlights
The official rate at banks remains pegged at 1507.5 pounds to the dollar, but that rate remains available only for vital imports amid a severe dollar crunch.

Lebanon’s central bank said foreign exchange dealers could not sell US dollars for more than 3,200 Lebanese pounds, according to a circular on Sunday, after the currency tumbled on the parallel market over the past week.

The pound, which has lost more than half its value since October amid a deep financial crisis, fell sharply last week, nearing 4,000 to the US currency before dealers began a temporary strike on Friday.

The official rate at banks remains pegged at 1507.5 pounds to the dollar, but that rate remains available only for vital imports amid a severe dollar crunch. The central bank said last week's currency transfer services could exchange at 3625 pounds.

The circular said the US dollar exchange rate had risen against the pound in an “unjustified way over the last few days”.

In a related development, Lebanese parliament speaker Nabih Berri has warned that removing the central bank governor would send the currency tumbling and threaten deposits, after Prime Minister Hassan Diab slammed Riad Salameh for the pound’s fall.

Diab on Friday cast Salameh as responsible for a currency crisis that has threatened to further destabilize a country already in dire financial straits.

The politically influential Maronite Christian patriarch said criticism of Salameh would only hurt Lebanon.

"We ask: who benefits from the destabilization of the central bank governorship?" said Patriarch Bechara Boutros Al-Rai. "We know the dire outcome, which is eliminating the confidence of the Lebanese people and (foreign) states in the constitutional foundations of the state."

Lebanon is governed according to a sectarian system that parcels out-state positions according to religious groups. The central bank governor is always a Maronite Christian while the premier is always a Sunni Muslim.

Diab's government was formed in January with the support of the powerful Iranian-backed Shiite movement Hezbollah and has struggled to enact the economic reforms demanded by foreign donors.

Gebran Bassil, head of President Michel Aoun's Maronite Christian party, echoed much of Diab's criticism of Salameh, saying the central bank bore "great responsibility" for losses of currency reserves and lack of transparency and coordination.

He said the state must now "correct" these mistakes, denying that this would constitute a "coup against the free financial system or central bank independence".

The pound's rapid fall has triggered small protests and raised the prospect of price hikes and broader unrest at a time when unemployment has soared and a coronavirus lockdown has dealt an additional blow. Two banks were attacked, one with a small bomb and another with petrol bombs over the past two days.


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