Lebanon’s central bank to intervene to contain exchange rate -presidency

File photo: Lebanese riot police wear masks to help curb the spread of the coronavirus, as they stand guard in front the central bank building, where the anti-government protesters protest against the Lebanese central bank’s governor Riad Salameh and against the deepening financial crisis, in Beirut, Lebanon, Thursday, April 23, 2020. (AP Photo/Hussein Malla)

BEIRUT (Reuters) – Lebanon’s central bank will allow banks to conduct currency transactions similar to exchange dealers and will step in to rein in the pound/dollar rate, the presidency said on Friday.

“As of next week, banks will be allowed to deal with currencies like legitimate exchange dealers…via the (central bank’s electronic) platform,” a spokesman for President Michel Aoun said after his adviser met Central Bank Governor Riad Salameh.

Sharp new falls in the Lebanese pound, which has lost 90% of its value, have fueled unrest in recent weeks. Angry protesters have been blocking roads with burning tires, some shops and factories have closed, and videos have started to circulate of people fighting over cheaper subsidized food in supermarkets.

Pharmacies across the country closed their doors on Thursday in protest at the difficulty of replenishing stocks amid a hard currency crunch that is affecting imports. 

The economic crisis has also been compounded by lockdown measures to contain the coronavirus pandemic.

Changers welcome move

The Syndicate of Money Changers in Lebanon on Friday welcomed measures announced by the Presidency and the central bank to rein in the dramatic fluctuations in the dollar exchange rate on the black market.

In a statement, the Syndicate said the move to return the currency exchange operations to “legitimate money changers” and to act against “the ghosts of the black market” will contribute to “stabilizing the dollar exchange rate after the confusion that affected all commercial sectors and aggrieved citizens.”

The Syndicate added that the central banks’ electronic platform will become “the official source for the real dollar exchange rate and will replace the suspicious applications and their oriented exchange rates that controlled the markets and the lives of citizens.”

The Lebanese pound has lost around 90 percent of its value against the dollar on the black market in 18 months of crisis.

While the currency remains officially pegged to the greenback at 1,507 Lebanese pounds, the exchange rate has shot up to around 15,000 on the black market before going down to around 11,000 in recent days.

REUTERS/ Asharq Al-Awsat