Lebanon’s central bank seeks to strengthen its currency after the crisis

Lebanon’s Central Bank Governor Riad Salameh speaks during an interview for the Reuters Next conference, in Beirut, Lebanon November 23, 2021. REUTERS/Mohamed Azakir

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BEIRUT, Jan 14 (Reuters) – Lebanon’s central bank said on Friday it was aiming to boost the value of the Lebanese pound by easing restrictions on dollar purchases after the currency hit a record high, fueling further protests against rising prices and collapsing economy.

The pound, which has lost more than 90% of its value since the outbreak of Lebanon’s financial crisis in 2019, has fallen past 33,000 to the dollar, although it has recovered ground to around 27,200. Friday.

Before the crisis, which plunged a significant proportion of inhabitants into poverty, it was exchanged at 1,500 for a dollar.

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In response to the sharp decline, the central bank said it was removing a cap tied to bank purchases of dollars using the official Sayrafa exchange rate platform.

“This initiative aims to curb volatility in the foreign exchange market and aims to strengthen the value of the pound against the dollar,” bank governor Riad Salameh told Reuters.

“…The operation consists in reducing the amount of banknotes in Lebanese pounds.”

Salameh also said there had been “signs of price manipulation in the dollar against the pound”, without giving details.

An analyst described the central bank’s decision as taking ‘a Panadol pill to deal with a major crisis’, saying the government needed a reform program to tackle deep economic problems .

Commercial banks have all but shut their doors to depositors amid a liquidity crunch caused by the economy collapsing under a mountain of state debt.

A new cabinet was formed in September, promising to start fixing the economy and restarting talks with the International Monetary Fund, but ministers have not met for three months due to a dispute over the conduct of an investigation into a huge explosion in the port of Beirut in 2020.

Salameh faces multiple national and international investigations into his conduct as head of the central bank, which he has led for three decades. He denies any wrongdoing.

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Reporting by Laila Bassam and Nayera Abdallah; Editing by Edmund Blair and John Stonestreet

Our standards: The Thomson Reuters Trust Principles.

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