Lebanon: USD Exchange Rates Hit Highest Records
The exchange rate of the dollar against the Lebanese pound in the parallel market registered on Monday an unprecedented rise in weeks, exceeding LBP 2,450.
The situation forced the Lebanese judiciary to intervene by cracking down on unlicensed money changers, as the official exchange rate set by the Central Bank is still pegged between LBP1,507-1,517 to the dollar.
This comes after an agreement was announced last month between money changers and the Central Bank governor, Riad Salameh, to fix the exchange rate in the parallel market at about LBP 2,000 – a decision that was not implemented.
Experts link this rise to the decline in the dollar’s supply in the market, as a result of banking restrictions that prevent depositors from withdrawing their money, in addition to concerns about the decision that the Lebanese government will take regarding the payment of Eurobond maturing in March.
This situation prompted Chief Financial Prosecutor Judge Ali Ibrahim to summon the head of the money changers syndicate, Mahmoud Mrad, to explain the confusion in the parallel market.
Mrad told the Central News Agency (Al-Markaziah): “We explained to Judge Ibrahim the reasons behind the rise in the price of the dollar. The big flow on the purchase left the market uncontrolled, and we are reassured that the judicial authorities are now handling the file.”
He attributed the reasons for the big demand to “current information circulating that banks will secure the dollar for depositors only every 15 days.”
“The less the supply, the higher the demand,” he noted.
Mrad added that several uncertified shops were permanently closed, and the judicial authorities were currently pursuing people trading the dollar on the streets.
Economist Violet Balaa told Asharq Al-Awsat that the rise in the exchange rate was the result of mounting concern over the lack of a clear government vision regarding the payment of Eurobonds, ahead of a expected meeting with an IMF delegation.
“There will be negative effects for any option that will be taken,” she remarked.