Thursday, October 28

Lebanese central bank rejects changing cash withdrawal exchange rate

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BEIRUT — The Lebanese central bank rejects any change to the exchange rate used to withdraw cash in Lebanese pounds from US dollar accounts in the absence of a comprehensive plan for the economy, which is in deep financial crisis, the bank said on Wednesday.

Hard currency has dried up in Lebanon since it slumped into a major financial meltdown in 2019, and savers with US dollar accounts have only been able to make withdrawals in Lebanese pounds at an exchange rate of 3,900 pounds to the dollar.

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This implies a de facto haircut — or reduction — of some 80% on the value of their savings, with dollars changing hands at around 17,000 pounds on the parallel market on Wednesday.

Parliamentarians have been calling for the rate applied to cash withdrawals to be raised. But in a statement on Wednesday, the central bank said any change to the rate in the absence of a comprehensive financial plan would have “big consequences” on the money supply “ and the dollar exchange rate.”

The central bank said it was extending the current rules that determine the exchange rate used for cash withdrawals from hard currency accounts until Jan. 31, 2022, “to give the government time to present its reform plan,” the bank said.

Prime Minister Najib Mikati, who took office this month, has vowed to revive talks with the International Monetary Fund and to implement reforms to remedy the crisis. (Reporting by Laila Bassam; Writing by Tom Perry, Editing by William Maclean)