Yesterday, the Lebanese central bank head, Riad Salameh, commented about the crisis faced by the pound in the black market. According to Salameh, “nobody knows” how much the dollar could rise against the pound on the black market.
The extremely serious situation continues to escalate, adding more pressure on the currency.
The turbulence in Lebanon’s political landscape places the country in its worst economic crisis in about a decade. The turmoil heavily damaged the Lebanese central bank’s confidence and battered the country’s banking system.
Devaluation risks are also piling in on the central bank that is based in a country with great foreign debt burdens.
The Lebanese pound has depreciated by more than 30% on the parallel market. As it’s the only main source for cash, banks in the country tightened regulations which drove importers to raise prices.
After the policy makers’ meeting with the Parliamentary finance and budget committee yesterday, the central bank governor faced the press. Salameh said that they hope that Lebanon improves so that the economy could also get better.
No Changes in Rates
Despite the major problems faced by the country’s banking system, a spokesperson said there are no changes in rates. The Lebanese central bank leader also didn’t mention any changes in the bank’s official pegged rate and monetary policy.
The 60-year old governor ruled out breaking the peg, which is fixing the pound around 1,507.5 against the greenback. He repeatedly reiterated that he is determined to maintain the pegged rate.
In November, the central bank chief claimed that the bank has the power to underpin the pound’s stability. He then said that the bank will not approach exchange dealers to give dollars just to maintain the official rate.
Exchange dealers on the streets are already offering 2,000 Lebanese pounds for dollars in recently. While banks are still sticking with the official rate established by the bank.
Other banks also block most transfers from abroad and tried to curb dollar withdrawals. Aside from that, local banks are also limiting dollar withdrawals to $200 a week.