BEIRUT — Lebanon’s central bank Wednesday extended the deadline for Circular 161, meaning it will continue to pump unlimited US dollars into the currency market until at least the end of March.
Here’s what we know:
• Circular 161 was originally released on Dec. 16, allowing banks to sell dollars to depositors at the Sayrafa rate, but keeping in place the monthly lira liquidity quotas granted to banks.
• On the back of accelerating losses in the lira against the US dollar, reaching an all time low of LL33,700 to the US dollar in mid-January, the central bank amended the circular and removed all quotas, thus allowing banks to sell US dollars in unlimited quantities to their clients. Then, on Jan. 26, it renewed the circular for a second time until the end of February.
• Since the release of the circular on Dec 16, the Sayrafa rate has strengthened from LL22,700 to the US dollar to LL20,300 to the US dollar as of Tuesday — a 12 percent appreciation in value. While the parallel market rate gained 34 percent from LL27,875 to LL20,800 to the US dollar.
• Total amounts recorded on the Sayrafa platform since Dec. 16 have exceeded $1.3 billion, with $1.09 billion since Jan. 11
• The central bank’s bimonthly published balance sheet shows a drop in foreign currency reserves from $13.06 billion on Dec. 15 to $12.18 billion on Feb. 15, or a total drop of around $800 million.
• Currency in circulation shrank from $30.22 billion to $28.07 billion for the same period, a drop of $2.15 billion or 7 percent.
• On Monday, the monthly consumer price index recorded its 19th triple-digit year-on-year increase — up 239.68 percent compared to January 2021. Month-on-month inflation slowed to single digits, to 7.69 percent.
• On Feb. 2, the central bank announced that the Sayrafa rate will be used for all fresh and all international card payments, including point-of-sale and e-commerce transactions and ATM withdrawals.
• On Tuesday, the central bank released Circular 614 authorizing money transfer companies to carry out foreign exchange transactions if they meet certain criteria. The move is a bid to increase the source of US dollar funds to the central bank. Until now, only OMT, the representative of the Western Union network in Lebanon, had been authorized to offer this type of service.