New low for Lebanon's currency threatens food imports

Importers said the Lebanese pound was being quoted at about 7,500 to the US dollar on the black market

Lebanese anti-government protesters chant slogans near the presidential palace in Baabda, east of Beirut, on June 25, 2020. AFP

The Lebanese pound tumbled to new lows against the dollar on Friday on a parallel market where it has now lost around 80 per cent of its value since October, and a food importer said the currency collapse was hitting imports.

The currency crisis is part of a wider economic meltdown that poses the biggest threat to the stability of import-reliant Lebanon since the 1975-90 civil war.

Food importers were being quoted a price of 7,500 to buy dollars on Friday, said Hani Bohsali, president of the Syndicate of Importers of Foodstuffs, Consumer Products and Drinks. A second market participant cited exchange rates of 7,300/7,600.

That compares to rates of 3,850/3,900 at licensed foreign currency dealers and the official peg of 1,507.5, which the central bank is still applying for imports of wheat, medicine and fuel.

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Rising anger as Lebanon's economy slumps

Lebanese anti-government protesters take part in a symbolic funeral for the country in the capital Beirut on June 13, 2020, the third consecutive day of demonstrations over a deepening economic crisis. AFP

Lebanese anti-government protesters throw rocks at soldiers amid clashes in the Bab al-Tabbaneh neighbourhood in the northern port city of Tripoli on the third consecutive day of demonstrations against deepening economic crisis. AFP

Lebanese soldiers deploy by a civil defence firefighting truck during clashes with anti-government protesters in the northern port city of Tripoli amid fresh demonstrations over a spiralling economic crisis. AFP

Lebanese civil defence firefighters extinguish flames in a shop as anti-government protesters and security forces clash in the northern port city of Tripoli amid fresh demonstrations over a spiralling economic crisis. AFP

Lebanese soldiers with riot gear react during clashes with anti-government protesters in the northern port city of Tripoli amid fresh demonstrations over a spiralling economic crisis. AFP

Lebanese anti-government protesters block a road with burning tyres in the northern port city of Tripoli amid fresh protests over a spiralling economic crisis. AFP

Lebanese anti-government protesters clash with security forces in the northern port city of Tripoli amid fresh protests over a spiralling economic crisis. AFP

Lebanese anti-government protesters buy corn from a street vendor next to burning garbage bins during clashes with security forces in the northern port city of Tripoli amid fresh protests over a spiralling economic crisis. AFP

Lebanese anti-government protesters take shelter behind a public phone booth as a local bank's branch burns during clashes with security forces in the northern port city of Tripoli amid fresh protests over a spiralling economic crisis. AFP

Lebanese anti-government protesters take part in a symbolic funeral for the country in the central area of the capital Beirut on the third consecutive day of demonstrations over a deepening economic crisis. AFP

Lebanese soldiers deploy during an anti-government protest in the Bab al-Tabbaneh neighbourhood in the northern port city of Tripoli on the third day of demonstrations across the country over deepening economic crisis. AFP

Lebanese soldiers clash with anti-government protesters in the Bab al-Tabbaneh neighbourhood in the northern port city of Tripoli on the third day of demonstrations across the country against deepening economic crisis. AFP

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The central bank said "liquidity was secured" at the 3,850/3,900 rates in a statement announcing the activation on Friday of a new electronic trading platform at licensed currency dealers. Black market volumes were "tiny", it said.

But Mr Bohsali said food importers have only been able to secure 20 per cent of their foreign currency needs at the licensed dealers in the last two weeks, leaving them dependent on the parallel market for the rest.

"Food imports are being reduced. It cannot continue this way. If you can't find dollars to import, you don't have any guarantee that if you ship something you will be able to get the funds for it."

The pound has continued to slump despite President Michel Aoun's pledge on June 16 that the central bank would supply the currency market with dollars to prop it up.

Lebanon defaulted on its foreign currency debt in March, citing critically low reserves.