Lebanon’s central bank to ease the demand for hard currency

FILE PHOTO: Lebanon's Central Bank Governor Riad Salameh speaks during an interview with Reuters at his office in Central Bank in Beirut, Lebanon October 24, 2017. REUTERS/Jamal Saidi/File Photo
FILE PHOTO: Lebanon’s Central Bank Governor Riad Salameh speaks during an interview with Reuters at his office in Central Bank in Beirut, Lebanon October 24, 2017. REUTERS/Jamal Saidi/File Photo

Lebanon’s central bank governor says the bank will secure foreign currency for some imports in a move that is expected to ease the demand for hard currency.

Riad Salameh’s comments on Monday came a day after hundreds protested in Beirut and elsewhere in Lebanon over a worsening economic crisis, compounded by worries that Lebanon’s dollar-reliant currency is losing value for the first time in more than two decades.

Lebanon is facing a deep-running fiscal crisis as it staggers under one of the highest debt ratios in the world, at $86 billion — or more than 150% of the country’s gross domestic product.

Salameh said after meeting President Michel Aoun that the central bank will secure foreign currency needs of the private and public sectors, according to official prices.

Some of the protesters in Beirut’s downtown blasted Lebanese political leaders, blaming them for widespread corruption in the country.

The recent events have raised awareness of the country’s deteriorating  economic and financial situation. The ability of the state to service its sovereign  debt has been called into question, setting off a wave of austerity measures by authorities.

Dollar shortage

Lebanon has maintained a fixed exchange rate (1,507.5) LBP between the Lebanese pound and US dollar, but on Thursday, the exchange rate at money changers reportedly reached over 1,600 LBP, because the central bank has been limiting the supply of US dollars in the market to defend the Lebanese pound.

The shortage of the dollar restricted the ability of many traders to import key items like wheat , fuel and medicine which prompted (Banque du Liban) CBD to issue instructions to regulate the provision of funds to import these key items.

AP