Lebanon moves to control spiraling unofficial exchange rate

A money exchange vendor displays Lebanese pound banknotes at his shop in Beirut, Lebanon. (Reuters)

Lebanon's central bank on Friday sought to rein in exchange rates and enforce a cap on the local currency in the parallel market to contain its unofficial devaluation.

Central bank chief Riad Salameh asked “all exchange offices, under pain of legal or administrative sanctions, to commit exceptionally to a maximum buying price for foreign currency in Lebanese pounds of no more than 30 percent above the exchange rate set by the central bank to deal with lenders.”

The official exchange rate has stood at 1,507 Lebanese pounds to the dollar for decades, but the value of the local currency has plummeted to more than 2,600 on the black market.

Money changers in protest-hit Lebanon had agreed in January to cap the dollar exchange at 2,000 pounds, but the move has failed to stem spiraling rates.

 

Friday's central bank order, which reinforces the January agreement, is to apply for the next six months, according to the statement carried by state-run National News Agency.

Debt-ridden Lebanon is facing its most serious economic crisis since the end of its 1975-1990 civil war.

Banks have increasingly limited dollar withdrawals and transfers abroad to stem a severe liquidity crisis, even as the tanking economy has caused businesses to slash salaries, fire staff, or close.

The country has been rocked by unprecedented, nationwide protests in recent months, led by young people who blame government corruption and incompetence for the lack of jobs and basic services.

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Last Update: Wednesday, 20 May 2020 KSA 10:02 - GMT 07:02
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