Last day to withdraw transferred dollars in Lebanon, long lines at transfer shops

Crowds lined up in front of some money transfer offices Thursday in Lebanon, the last day before a decision takes effect that will require all transfers to be withdrawn in Lebanese lira, rather than in dollars, regardless of the currency sent.

While banks have put in place strict limits on withdrawing dollars for months, until now, “new money” sent from outside Lebanon in dollars could be withdrawn in dollars. However, last week, Lebanon’s Central Bank issued a decision saying that cash transfers must be given in local currency at the “market rate.”

Read more: Lebanon’s acceptance of black-market exchange rate angers small depositors

The market rate, as determined by the banks, falls between the official rate and the black market rate.

While the official exchange rate remains pegged at 1,507 lira to the US dollar, the market rate changes daily, and inflation has accelerated since the coronavirus-related lockdown, during which banking hours have been limited.

Thursday, the rate shot above 3,500 lira to the dollar at some exchange shops, an all-time high. The site lebaneselira.org, that daily posts crowdsourced average buy and sell rates, noted there was “no clear Lebanese lira exchange rate due to extreme market volatility resulting from Banque du Liban (Central Bank of Lebanon)’s recent circulars that significantly reduced US dollars in circulation in Lebanon.”

A second circular issued from the central bank Tuesday allows depositors with dollar accounts to withdraw funds in lira at the “market rate” – to be determined daily by the banks – rather than the official rate. Some analysts have dubbed the move, aimed at keeping dollars in the banking system, a voluntary “haircut” on depositors, as it will reduce the real value of their money.

Read more: Lebanon from golden age to economic crisis, new data shows rise and fall: Report

The decision not to allow money transfers to be withdrawn in dollars prompted a rush on some of the money transfer offices.

Photographs and videos posted on social media showed mass crowds gathered in front of the main OMT office in the Beirut area of Tayouneh, as well as in front of some Western Union offices.

“Difficult to overstate the pain & humiliation suffered at the hands of inept political class,” wrote Firas Maksad, a Washington-based consultant on Middle East policy and adjunct professor at George Washington University’s Elliot School for International Affairs, above a post showing a crowd gathered in front of one Western Union office.