Cyprus Mail
Banking and Finance

Lebanese banks raise USD withdrawal rate to 3,850 pounds/dollar

FILE PHOTO: REUTERS/Mohamed Azakir/File Photo

Lebanese banks raised the exchange rate to 3,850 pounds per dollar for withdrawals from U.S. dollar accounts, bankers said on Monday, as a liquidity crunch erodes the currency’s value.

With dollars growing ever more scarce, the Lebanese pound has plunged since last year by nearly 80 per cent from an official peg of 1,507.5, now only available for vital imports.

Inflation, unemployment and poverty have soared. The government is trying to enlist IMF help to claw out of the crisis, which is seen as the biggest threat to Lebanon’s stability since its 1975-90 civil war.

Banks have since October frozen people out of their savings and blocked transfers abroad. Under an April central bank circular, they now pay depositors with dollar accounts in cash in the local currency at a “market rate” within limits.

At the new withdrawal rate, depositors would still lose around 50% of the value of their savings relative to the informal market, where two currency dealers said the greenback traded at 8,000 pounds on Monday.

Two bankers at two of Lebanon’s biggest lenders said they raised the rate from 3,000 to 3,850. One of them described it as an attempt “to narrow the gap between the bank withdrawal rate and the rate on the parallel market,” which has become a main source of cash.

A banking official said several banks started adopting the 3,850 rate this week and others would soon follow.

There was no official announcement from Lebanon’s banking association.

A fresh, sharp fall in the currency this month has sparked new protests across Lebanese cities.

The central bank has sought to stabilise the rate at exchange houses by setting a unified rate with them each day, with penalties for dealers not adopting it. That announced rate was 3,850/3900 pounds for buying and selling on Monday.

Still, importers say they have found it nearly impossible to secure dollars.

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