Lebanon’s central bank will intervene in the market starting on Thursday to protect the Lebanese pound, whose declining value has forced up the price of food and other commodities, Prime Minister Hassan Diab said.
The pound has lost more than half of its value since October as Lebanon has sunk deeper into a financial crisis that’s considered the biggest threat to its stability since the 1975-90 civil war.
“I received a promise from the governor … that the bank will intervene in the market, starting from today, to protect the Lebanese pound and to rein in the rise of the dollar exchange rate,” Diab said in a televised speech.
He also said importing basic food stuffs would be supported and prices monitored on a daily basis. Lebanese would soon see a decline in the prices of those goods, he said.
In separate comments published on Thursday, Diab said Lebanon was at risk of a major food crisis and many Lebanese might soon find it hard to afford bread because of the financial crisis and the fall-out of COVID-19.
“Once the breadbasket of the Eastern Mediterranean, Lebanon is facing a dramatic challenge that seemed unimaginable a decade ago: the risk of a major food crisis,” Diab wrote in the Washington Post.
Lebanon has continued to provide dollars for imports of wheat, medicine and fuel at the official pegged rate of 1,507.5 pounds to the dollar even as the currency has collapsed on a parallel market.
Dollars have been changing hands around 4,000 pounds on the parallel market recently.
The central bank said last week it aimed to provide dollars for imports at an exchange rate of 3,200 Lebanese pounds to reduce food prices.