The Cradle
Lebanese Central Bank announces measures to prevent further currency devaluation
The Central Bank set a new lira withdrawal rate, in addition to further measures, promoted as a means to alleviate Lebanon's economic crisis
By News Desk - December 16 2021
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Lebanon’s Central Bank Governor Riad Salameh. (Photo credit: JOSEPH EID/AFP/Getty Images)

The Central Bank of Lebanon (Banque du Liban, BdL) announced a series of measures on 15 December aimed at preventing further devaluation of its currency after the Lebanese lira reached a new low of 29,000 to the dollar.

In 2020, the Central Bank of Lebanon set the withdrawal rate to 3,900 Lebanese lira to the dollar, a rate that was increased on 10 December to 8,000 Lebanese lira to the dollar.

Since late 2019, the Lebanese lira has been on a consistent trajectory of devaluation from its 23 year long peg of 1,500 Lebanese lira to the dollar. Following the raising of the withdrawal rate by the Central Bank of Lebanon, the lira took a further tumble from around 25,000 lira to the dollar to 29,000.

In a statement, the Central Bank of Lebanon announced that a meeting was held, attended by Finance Minister Youssef Khalil and the Governor of the Banque du Liban, Riad Salameh, to discuss “ways to curb the deterioration of the exchange rate of the Lebanese pound, which reached 29 thousand pounds against one dollar.”

The statement also said that “the Banque du Liban will provide the operating banks with their cash share for the remainder of this month in cash of US dollars instead of the Lebanese pound, at the exchange rate of the exchange platform.”

The official statement from the Central Bank also explained that it “will organize the repayment of commercial loans in foreign currencies in cash in Lebanese pounds at the price specified in Circular 151; that is, 8000 Lebanese pounds currently, which helps reduce the demand for the dollar and increases the demand for the Lebanese pound in the market.”

Critics of Central Bank policies say that these recent measures do little to support the lira against further devaluation, and argue that the crisis is political.

Ziad Nasser al-Din, a Lebanese economic expert, told Sputnik News that the crisis is more political than technical and that there is external and internal “collusion” pushing the Lebanese pound towards further collapse. He added that the foreign siege on the Lebanese economy targets the achievement of political gains “that are no longer hidden from anyone.”

This year, Central Bank Governor Riad Salameh has faced an embezzlement probe for the bank’s role in the massive corruption that has aggravated Lebanon’s current economic crisis, the worst the country has seen in its history.

A Swiss probe earlier this year questioned Salameh over a possible $330 million in shady transactions between 2002 and 2015, a key finding in the international probe on Salameh’s involvement in the misappropriation of funds.