A customer wearing a face mask and gloves, is served at a counter of a currency exchange store, during a countrywide lockdown to combat the spread of coronavirus disease (COVID-19) in Beirut, Lebanon. (Reuters)
Lebanon’s battered pound currency has slid to fresh lows against the US dollar despite a new pricing system Beirut hopes can rein in soaring food prices as it negotiates a deal with the International Monetary Fund to climb out of crisis.
The pound has lost over 60 percent of its value since October, the result of a dwindling stock of dollars that has prompted banks to cut savers’ access to hard currency and ration dollars exclusively for fuel, medicine, and wheat at a pegged rate of 1,507.5 pounds.
One currency dealer said dollars on Wednesday were being bought at 4,250 and sold at 4,500. A second dealer said he was buying at 4,300 versus 4,100 a day earlier but not selling because of scarcity.
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Importers said it was getting increasingly difficult to source enough dollars to complete orders, even at higher rates.
“Looking forward only a few weeks ahead, we may not be able to honor our engagements toward our suppliers,” said Hani Bohsali, general manager of Bohsali Foods, a major food
importer.
The government and money changers last week launched a unified pricing system, with a gradually reduced rate announced each day with the aim of reaching 3,200 pounds.
Demonstrators run amid a cloud of tear gas during a protest against the government performance and worsening economic conditions, in Beirut, Lebanon June 6, 2020. (Reuters)
As part of the scheme, money changers on Wednesday set a buying price of 3,890 and selling price of 3,940 and the central bank said dealers who did not comply would be penalized. Importers said dollars at this rate were unavailable.
Lebanon’s dollar supply has been further hit by a currency crisis in neighboring Syria. Syrians are piling into dollars to protect against inflation and hedge against the effect of impending US sanctions.
Read more: Link between Lebanon and Syria's economies spells disaster for both
The Lebanese pound’s collapse has threatened renewed unrest as Beirut negotiates an IMF program tied to billions of dollars in financing to kickstart a recovery.
Fresh protests erupted late on Tuesday in Beirut and Tripoli, triggered in part by the currency crisis.
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