The exchange rate of US dollar dropped from LBP 40,600 to 36,000 on the black market on Sunday, shortly after Central Bank Governor Riad Salameh said in a statement that the BDL (Banque Du Liban) would stop buying dollars on the Sayrafa platform starting on October 25 (Tuesday) until further notice.
“The Banque du Liban (Central Bank) will exclusively sell US dollars via the Sayrafa platform as of Tuesday, knowing that it will not purchase dollars on the Sayrafa platform from Tuesday until further notice,” Salameh said in his statement.
Reuters news agency quoted bankers as saying that the move is intended to strengthen the Lebanese pound after it traded at a new low of more than 40,000 to the dollar last week.
Furthermore, Asharq al-Awsat newspaper reported Monday that “Lebanon’s financial markets are expecting important developments this week, which have the ability to create significant changes on the financial scene, especially as to the LBP exchange rate and the rate of withdrawals from US dollar savings, in addition to paving the way practically for the banking sector restructuring plan.”
Quoting informed sources, Asharq Al-Awsat newspaper said that the Central Bank “intends to issue a wave of new circulars as of the middle of this week.”
“Temporary Drop”
Several analysts, meanwhile, raised questions over the real intention of the BDL governor’s move. Lebanese economist Hasan Hamadeh stressed that the Sunday’s drop in the exchange rate is temporary.
In an interview with Al-Manar on Monday, Hamadeh said that Salameh’s announcement means that he intends to pump US dollar into the Lebanese market.
“Salameh recently printed more Lebanese currency (nearly 22 trillion LBP). He has been also buying dollar in a bid to raise the demand on the foreign currency. Such measures contributed to surge in exchange rate (40,000), as well as to inflation,” Hamadeh said.
“The Central Bank, through buying dollar, has collected nearly $500,000 (half a million). And now, Salameh is intending to pump dollar into the market, in a clear message that he does control the market and the exchange rate.”
The drop in the exchange rate is temporary as there are no breakthroughs on both political and economic levels in Lebanon, the economist told Al-Manar.
“Suspicious Move”
On the other hand, Lebanese daily Al-Akhbar described Salameh’s move as ‘suspicious’.
In an article entitled “The Black Magician Admits: I’m Behind Surge in Dollar (exchange rate),” Journalist Mohammad Wehbe said Sunday’s drop in US dollar exchange rate was surprising as the financial market was closed.
“The statement acknowledges that Salameh has been during the latest weeks contributing to the surge of dollar exchange rate,” Wehbe wrote, noting that the move comes as the term of President Michel Aoun comes to an end.
“The statement includes implied confession that the BDL had been competing other parties in the Lebanese market, as it was purchasing dollar at any cost, mainly leading to the plunge in Lebanese Lira.”
The statement comes in a decisive political moment as it coincides with the end of President Michel Aoun’s term, Wehbe said.
“Therefore, Salameh is trying to say that he controls the market in a bid to defame President Aoun at the end of his term.”
Source: Al-Manar English Website
