BEIRUT — Commercial bank depositors can now withdraw from their so-called local dollar or “lollar” accounts at a rate of LL8,000 to the greenback, Banque du Liban announced in a statement issued Thursday afternoon.
Here’s what we know:
• Previously “lollars” were withdrawable at a rate of LL3,900 to the dollar. Now, BDL’s Circular 601 allows them to be withdrawn at a rate of LL8,000 to the dollar. The new circular replaces and cancels Intermediate Circular 596 of Sept. 29, which provided for extending until Jan. 31 the mechanism initially put in place by the Circular 151 of April 21, 2020. Circular 601 will be valid until June 30, 2022.
• Under Circular 601, the new withdrawal limit is set at $3,000 per account per month to limit the growth in the money supply.
• Thursday’s decision by BDL is a step towards the unification of exchange rates, but the move still lacks the context of a comprehensive reform plan. Marwan Barakat, group chief economist and head of research at Bank Audi commented on the decision saying “the move was to reduce the differential with the parallel market and support bank depositors,....and it is crucial to ratify a recovery plan to avoid inflationary pressures and further depreciation in the market rate.”
• The lira in the parallel market is currently trading at LL25,100
• Parliamentary Finance and Budget Committee chair MP Ibrahim Kanaan (FPM/Metn) said in September that BDL had told the committee it wanted to study a replacement dollar withdrawal rate before the end of 2021.