Casting doubts on Lebanon’s pound peg
This time it is central bank governor himself who is doubtful
Dubai: Lebanon’s central bank Governor Riad Salameh said “no one knows” which way the country’s exchange rate is heading, suggesting the Lebanese pound’s peg to the dollar is under threat.
“When I spoke in the past, the dollar hadn’t reached 2,000 Lebanese pounds” in the black market, Salameh said, when asked about his previous comments that the Lebanese pound’s situation was good. The pound has been pegged at around 1,500 to the dollar since 1997.
Salameh spoke after a meeting in parliament with the acting finance minister, the head of parliament’s budget committee and the head of Lebanon’s banking association, according to the state-run NNA news agency.
“We are dealing with the crisis gradually,” said Salameh. “We hope the decision to increase banks’ capital improves” the economic situation.
Dire times
Lebanon is confronting one of its most serious financial and political crises since the end of the 1975-1990 civil war, with the economy paralysed, the currency sinking and foreign investors increasingly concerned the government will be forced to default on its debt next year.
The country has been without a functioning government since late October, when former Prime Minister Saad Hariri resigned in the face of the protests. The government’s funding model relies heavily on remittances from the millions of Lebanese living abroad.
Those flows have gone into reverse, leading banks to tighten restrictions on dollar withdrawals and ban transfers abroad.