Lebanon central bank announces 'open' sale of dollars at rate of 90,000

Measure is latest attempt to curb devaluation of freefalling national currency

A clerk counts Lebanese pounds at a currency exchange office in Beirut. AFP

Lebanon's central bank on Tuesday said it would sell unlimited US dollars at a discounted rate of 90,000 liras on its Sayrafa platform, in yet another attempt by the embattled financial institution to prop up the spiralling currency.

“The Banque du Liban (BDL) announces an open and continuous process to buy Lebanese banknotes and sell dollars for cash at an exchange rate of 90,000 [pounds] for every dollar,” Central Bank Governor Riad Salameh said.

Following the central bank's announcement, the Lebanese pound recouped some value, trading at 115,000 to the dollar by late afternoon.

By midday on Tuesday, the currency had plummeted to an unprecedented 140,000 pounds to the greenback on the black market, having devalued by 20,000 since the morning.

The public can exchange Lebanese pounds through banks or licensed “category A” money exchangers and will receive dollars within three days.

Lebanon's commercial banks began an open-ended strike in February to protest against a number of legal actions taken against them.

“Banks that return from their strike can participate in this process,” the statement added.

Financial experts who spoke to The National warned that BDL's move to provide unlimited dollars would in fact be limited by the banks' refusal to reopen and would lead to a rush on money exchangers in the interim.

BDL's move is “completely absurd”, Jean Riachi, a senior banker and chairman of FFA Private Bank Dubai Limited, told The National.

“It’s very futile. It will stop the acceleration for a while but each time, this move works less and less,” he said. “It won’t last. These are not real solutions.”

The crumbling financial institution has attempted similar measures in the past, all of which have proven to be temporary stopgaps.

Less than a month ago, on March 1, the central bank had set the rate for Sayrafa — the institution's exchange platform — at 70,000 Lebanese pounds to the dollar. But the move was not enough to stop the currency's rapid devaluation.

The updated Sayrafa rate “is yet another measure to play on the psychology of the market but in fact, technically, it worsens things”, said Mr Riachi, who added that it also “has an adverse effect on the dollar-lira parity”.

Lebanon's currency has lost more than 98 per cent of its value since the pound — pegged at 1,500 to the dollar for nearly 30 years — first unpegged from the greenback and began its descent, heralding the onset of the country's economic crisis in 2019.