BEIRUT — The Lebanese lira lost 4 percent of its value in less than 24 hours on Friday and is currently trading at LL26,000 to the US dollar on the parallel market following Banque du Liban’s decision Thursday to raise the withdrawal rate for dollar deposits in Lebanese bank accounts.
Here is what we know:
• The Lebanese lira hit a new record low after BDL announced Thursday that US-dollar deposits stuck in banks, known as “lollars” or “Lebanese dollars” will be withdrawn at a rate of LL8,000 instead of LL3,900. Bank deposits in foreign currencies have been blocked since the beginning of the economic crisis, which hit Lebanon two years ago.
• BDL complemented its decision to raise the rate to LL8,000 with imposing caps on withdrawals of $3,000 per account per month. It hopes with this measure to limit the increase in the money supply and to alleviate further pressure on the lira in the parallel market. Also, with the same objective, the banking industry has been reducing the monthly withdrawal limits in lira on clients’ accounts.
• Losses on the lira have already exceeded 90 percent since 2019. They currently stand at more than 60 percent this year to date, and at 15 percent since the resignation of former Information Minister George Kurdahi.
• Maroun Chammas, chairman of the Association of Petroleum Importing Companies confirmed to L’Orient Today that Banque Du Liban has increased from 10 percent to 15 percent the dollar contribution fuel importers have to provide to cover imports of the commodity. To obtain this dollar component importers typically have to turn to the parallel market. Chammas added that “further increases are dependent on many economic factors but the central bank will move forward [with increasing the dollar percentage required].” This will add further pressure on the lira. According to Chammas, the additional 5 percent will add up to $280,000 of US dollar demand per day to the parallel market. This is 6 percent of the total amount traded yesterday on Sayrafa. Sayrafa, a currency exchange platform introduced by the central bank to act as the official reference point for the Lebanese lira’s market value.