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bankingMay 30, 2022

Lira recovers as Salameh says banks to provide dollars anew


The unofficial dollar exchange rate dropped from a record high of LBP 38,000 to at least LBP 34,300 on Friday, immediately after Central Bank Governor Riad Salameh issued a statement saying banks would resume exchange operations at the Sayrafa platform rate as of Monday.

In a statement addressed to “all the holders of Lebanese pounds, be them citizens or institutions, who want to exchange them for U.S. dollars,” Salameh said exchange requests can be submitted to Lebanese banks as of Monday.

“These requests will be fulfilled in full within 24 hours,” Salameh added.

“This offer is open and available every day,” the governor went on to say.

In another statement addressed to banks, Salameh said: 'As of Monday, and for three consecutive days, Lebanese banks must keep their branches and cash counters open until 6:00 pm daily, to fulfill citizens’ requests to purchase dollars at the Sayrafa rate in exchange for Lebanese pounds.”

Banks must also “pay the salaries of public sector employees in dollars and according to the Sayrafa rate,” Salameh added.

Banks had stopped selling dollars at the Sayrafa rate in recent days, with some accusing them of suspending the operations in response to the government's financial and economic recovery plan.

The Lebanese pound had registered a new record low of LBP 38,000 to the greenback earlier on Friday.

For decades, the Lebanese pound was pegged to the dollar at 1,500, meaning that it has lost around 95 percent of its value in two years.

A financial crisis widely blamed on government corruption and mismanagement has caused the worst economic crisis in Lebanon's history.

The cost of a full tank of petrol now far exceeds the minimum monthly wage, mains electricity comes on barely two hours a day and unaffordable school fees are driving increased student dropouts.

Four out of five Lebanese are now considered poor by the World Bank.

The country desperately needs an international rescue package but the required reforms have not been forthcoming.

The exchange rate, which is unofficial but applies to most transactions, had recently stabilized at around 26,000 to the dollar but took a tumble after the latest legislative polls.

The results brought in a handful of independents who support the spirit of a 2019 protest movement which called for the wholesale ouster of Lebanon's corrupt and hereditary ruling class. But they also yielded a more scattered assembly that observers predict could remain stuck in a political deadlock that will further delay any meaningful economic recovery program.

naharnet