More than 10 currency exchange dealers arrested in Lebanon: Security forces

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)

More than 10 Lebanese currency exchange dealers were arrested for violating a new order that caps the exchange rate at 3,200 Lebanese lira to $1, according to Lebanon’s Internal Security Forces (ISF).

On Monday, Lebanon’s central bank said foreign exchange dealers could not sell US dollars for more than 3,200 lira to the dollar. The official rate remains pegged at 1507.5 lira to the dollar, but inflation over the last few months has seen the value of the lira fall to around 4,000 lira to the dollar on the parallel market.

Also on Monday, local newspaper an-Nahar reported that the Lebanese central bank set an exchange rate of 3,800 lira to the dollar, up from 3,625 on Friday, to be applied at money transfer firms and applies to remittances by Lebanese sending money home via wire transfer.

ISF announced via Twitter that they had implemented the new circular put in place by the central bank governor and had ordered that all unlicensed and licensed currency exchange dealers to close if they were found in violation of the circular, and their shops were sealed with red wax.

Authorities will suspend businesses by putting red wax on their doors when they are found to be operating informally or illegally.

Last week, a central bank order went into effect that all cash transfers into the country must be withdrawn in the local currency, regardless of the currency sent. Long lines formed at exchange houses the day before the order was enacted as people sought to withdraw dollars.

The economy has quickly deteriorated since October 2019 when protests broke out over worsening conditions in the country. Now, inflation continues to rise, and coronavirus lockdowns have left many out of work, and a series of protests over the last week have seen a resurgence of the movement that began last year.

Prime Minister Hassan Diab last week said Riad Salameh, the central bank’s head, was responsible for the currency crisis. Diab said the crisis-hit country had suffered $7 billion in additional losses since the start of the year and that liquidity in the banking system was running out, with $5.7 billion in Lebanese deposits exiting in January and February, Reuters reported.

But Speaker of Parliament Nabih Berri on Sunday came to Salameh’s defense, saying the currency would continue to tumble and threaten deposits if Salameh was removed.

Influential Maronite Patriarch Bechara Boutros Al-Rai also backed Salameh, saying criticism of Salameh would only hurt the country.

Salameh has served as governor of the central bank since 1993, and has been reappointed four times. In 2016, Salameh began introducing a series of financial engineering mechanisms that economists view as an attempt to prop up an economy on the verge of collapse.

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Last Update: Wednesday, 20 May 2020 KSA 09:54 - GMT 06:54
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