The deterioration of the Lebanese pound, following a circular by the Central Bank, which reduced its banking value to 8000 against the dollar

The deterioration of the Lebanese pound, following a circular by the Central Bank, which reduced its banking value to 8000 against the dollar

• 2021-12-09 23:30:54
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The exchange rate of the Lebanese pound fell on the parallel market Thursday, after the Central Bank announced a reduction in its value in banking transactions from 3900 to 8000 pounds to the dollar.

And a circular to the Central Bank stated that “in the event that any client requests to make any withdrawals or fund operations in cash from the accounts or from his dues in US dollars or other foreign currencies, the banks operating in Lebanon, subject to the approval of the concerned customer, must pay the equivalent of Its value is in Lebanese pounds, according to the price of 8000 Lebanese pounds per US dollar, within the ceiling of 3000 dollars per account per month.

While this measure appears to be in the interest of dollar depositors in the short term, it constitutes an acknowledgment by the Central Bank of the devaluation of the lira.
This will have direct repercussions on the parallel market, which is approved as a reference for setting the prices of most commodities, because the value of the national currency is deteriorating. Consequently, the prices of goods and services will witness a new rise.

The official exchange rate of the Lebanese pound has been fixed since 1997 at 1,507 pounds to the dollar, but the market value of the national currency has fallen by more than 90 percent.

On Thursday evening, the exchange rate in the parallel market reached 25,500 pounds to the dollar, a decline close to the lowest level recorded in November.

Experts say that the central bank's measure may exacerbate the unprecedented economic conditions in the country.

In a statement to AFP, expert Henry Shaoul said that the Lebanese Central Bank “continues to take unilateral, palliative measures. It is enough to repeat the same thing.”

For his part, expert Mike Azar considered that the measure “will incur more losses for the central bank” and will lead to “a further decline in the exchange rate of the lira and more inflation.”

Since the beginning of the economic and financial crisis that has hit Lebanon two years ago, Lebanese banks have stopped providing depositors with their money in dollars.