Lebanon: Currency Drops, Central Bank Sets New Exchange Rate at Transfer Firms

 Lebanon's currency continued its downward spiral before the dollar on Thursday, reaching a new low amid financial turmoil in the crisis-hit country. (AP Photo/Hussein Malla)
MANAGEMENT
Lebanon's currency continued its downward spiral before the dollar on Thursday, reaching a new low amid financial turmoil in the crisis-hit country. (AP Photo/Hussein Malla) MANAGEMENT
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Lebanon: Currency Drops, Central Bank Sets New Exchange Rate at Transfer Firms

 Lebanon's currency continued its downward spiral before the dollar on Thursday, reaching a new low amid financial turmoil in the crisis-hit country. (AP Photo/Hussein Malla)
MANAGEMENT
Lebanon's currency continued its downward spiral before the dollar on Thursday, reaching a new low amid financial turmoil in the crisis-hit country. (AP Photo/Hussein Malla) MANAGEMENT

The Lebanese central bank set an exchange rate of 3,625 Lebanese pounds per dollar to be applied by money transfer companies on Friday, a central bank source said.

This came as the local currency hit a new low amid financial turmoil in the crisis-hit country compounded by the coronavirus outbreak.

“Prices may change every day and will be set the day before,” the central bank source said, adding that the rate was based on the price dollars were fetching at foreign exchange offices.

“In the event that there are major fluctuations during the day, the price may be set again during the same day,” the source added, Reuters reported.

It was not immediately clear if the rate announced on Friday would be applied by commercial banks for such withdrawals.

The currency crash came as hundreds of Lebanese crowded outside money transfer offices Thursday, the last day that authorities allowed dollars to be dispensed to customers following new Central Bank rules.

The new rules, detailed in a bank circular released this week, require banks to convert cash withdrawals from foreign currency bank accounts to the local currency, the Lebanese pound, at market rates determined daily by the bank.

However, hundreds of protesters took to the streets in Beirut and other cities to denounce the policies of the Central Bank, ignoring regulations for social distancing because of the virus.

Parliament speaker Nabih Berri also urged the government on Thursday to use its legal powers to halt the “dramatic collapse” of the country’s pound currency before it is “too late”.

The change is meant to ease demand on the dollar but has instead caused panic among the Lebanese.

In Lebanon, people have relied on a stable national currency that has been pegged to the dollar for nearly 30 years.

The tiny Mediterranean country of about 5 million people has a large diaspora that sends foreign currency home or relies on transfers from here to students abroad. Also, many Lebanese keep their savings in foreign currency, the Associated Press reported.

The Lebanese pound traded between 3,500 and 3,700 to the dollar on Thursday, a sharp jump amid general currency depreciation that began in March. It had been pegged to the dollar at 1,500 pounds since 1990, the end of the country’s civil war.

For her part, Maha Yahya, director of the Beirut-based Carnegie Middle East Center, said the new rules are an effective float of the currency but it is not yet clear how the banks will implement them.

“Practically they are admitting the market rate. The problem is when you do it on its own without a broader financial package, and not part of a larger financial and economic rescue package, you are basically triggering a rapid inflation,” Yahya said.

The dollar is expected to continue to rise “so everybody now is hedging their bets and waiting," Yahya warned.

Lebanon is facing its worst economic crisis in decades, including unprecedented unemployment levels and a severe liquidity crunch. The crisis has been compounded by a nationwide general lockdown, in place for over a month, to combat the spread of coronavirus.

Prices of basic goods have soared— sugar for instance has gone up by nearly 67 percent. Consumer groups recorded a general 58% price increase on basic commodities since October.



Air France-KLM to Take Majority Stake in Scandinavian Airline SAS

(COMBO) This combination of pictures created on July 04, 2025 shows a Scandinavian airline SAS plane flying over Heathrow airport on the outskirts of London on January 15, 2024 (top) and an Air France-KLM plane taking off from Tegel 'Otto Lilienthal' Airport in Berlin on November 8, 2020. (Photo by Adrian DENNIS and Odd ANDERSEN / AFP)
(COMBO) This combination of pictures created on July 04, 2025 shows a Scandinavian airline SAS plane flying over Heathrow airport on the outskirts of London on January 15, 2024 (top) and an Air France-KLM plane taking off from Tegel 'Otto Lilienthal' Airport in Berlin on November 8, 2020. (Photo by Adrian DENNIS and Odd ANDERSEN / AFP)
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Air France-KLM to Take Majority Stake in Scandinavian Airline SAS

(COMBO) This combination of pictures created on July 04, 2025 shows a Scandinavian airline SAS plane flying over Heathrow airport on the outskirts of London on January 15, 2024 (top) and an Air France-KLM plane taking off from Tegel 'Otto Lilienthal' Airport in Berlin on November 8, 2020. (Photo by Adrian DENNIS and Odd ANDERSEN / AFP)
(COMBO) This combination of pictures created on July 04, 2025 shows a Scandinavian airline SAS plane flying over Heathrow airport on the outskirts of London on January 15, 2024 (top) and an Air France-KLM plane taking off from Tegel 'Otto Lilienthal' Airport in Berlin on November 8, 2020. (Photo by Adrian DENNIS and Odd ANDERSEN / AFP)

Air France-KLM plans to increase its stake in Scandinavian airline SAS to 60.5%, the latest step towards consolidating Europe's fragmented airline sector as carriers seek to strengthen their position against rivals.

The Franco-Dutch airline group said on Friday it intended to increase its stake from 19.9% currently by acquiring the stakes held by top shareholders Castlelake and Lind Invest.

The purchase, subject to regulatory clearances, is expected to close in the second half of 2026, Reuters quoted Air France-KLM as saying.

The value of the investment would be determined at closing, based on SAS's latest financial performance, including core earnings (EBITDA) and net debt, the company said. It declined to give details on those metrics.

Air France-KLM expects to generate "three-digit million" euros in synergies from raising its SAS stake, Air France-KLM finance chief Steven Zaat told analysts on a call.

Zaat said the deal would be funded from cash or a "plain vanilla bond" and would not impact the drive to reduce the group's hybrid debt. "We have ample room for it," he said.

Air France-KLM shares were flat in early trading.

JPMorgan analysts said there were reasons to be positive about the deal.

"SAS offers deeper access to a GDP-rich region in Scandinavia, there will now be an opportunity to unlock cost synergies as SAS becomes a subsidiary of the group," they said in a note, adding that "industry consolidation should also be viewed positively for the whole sector, even if not game-changing in terms of size."

INDUSTRY CONSOLIDATION

SAS welcomed Air France-KLM's announcement.

"European consolidation had to happen further, and we're very happy to be part of that," SAS CEO Anko van der Werff told Danish broadcaster TV2.

"In the current setup where Air France-KLM is a 19.9% shareholder, they're still a competitor," he said. "With the new stake, going above 50%, we can really tap into all of those synergies and offer those benefits to customers."

SAS said it would continue to invest in its fleet and network.

In 2023, Air France-KLM said it would invest about $144.5 million for its initial SAS stake, boosting its presence in Sweden, Denmark and Norway with the option to become a controlling shareholder after a minimum of two years, subject to conditions.

SAS exited from Chapter 11 bankruptcy protection in August last year.

The two carriers have already had a commercial cooperation since summer 2024. Control of SAS would allow Air France-KLM to expand in the Scandinavian market and create additional value for shareholders, Air France-KLM said in a statement.

"Following their successful restructuring, SAS has delivered impressive performance, and we are confident that the airline's potential will continue to grow through deeper integration within the Air France-KLM Group," said Air France-KLM CEO Ben Smith.

The deal comes as executives seek more consolidation in Europe's fragmented airline industry, which they say is needed to compete with US and Middle Eastern rivals.

Earlier this year, Germany's Lufthansa bought a 41% stake in Italy's ITA Airways and a stake in Air Baltic. The Portuguese government is looking to privatize its national carrier TAP.

Lufthansa and Air France are also in talks about buying a stake in Spain's Air Europa.
SAS has 138 aircraft in service and carried more than 25 million passengers last year, generating revenues of 4.1 billion euros ($4.8 billion).

Air France-KLM group would have a majority of seats on the board of directors, while the Danish state will keep its 26.4% stake in SAS and its seats on the board.