(Credit: AFP)
BEIRUT — The Lebanese lira breached its all-time low of LL33,700 to the US dollar on Monday, trading above LL34,000 to the dollar on the parallel market.
Here’s what we know:
• The lira's losses have exceeded 20 percent since May 15, the day of the parliamentary elections.
• The central bank last week renewed Circular 161 until the end of July, after rumors spread that it was planning to stop intervening in the market.
• Despite the central bank’s extension of the circular, the parallel market rate at LL34,000 to the US dollar continues to diverge from the Sayrafa rate at LL24,300, and the difference between the two currently stands at the widest level ever reached.
• Banks contacted by L’Orient Today confirmed that transactions for commercial clients over the Sayrafa platform are experiencing increasing delays, sometimes of up to two or more weeks. Some are even warning their clients that trading over the platform could stop at a moment's notice.
• One banker said, “Circular 161 has lost its effectiveness, the central bank must review its strategy, otherwise there is nothing that can stop the selloff.”
• The government in its final meeting before entering caretaker status on Friday approved the Financial Sector Rehabilitation Strategy (FSRS), calling for the writeoff of $60 billion in deposits.
• Political gridlock at the level of electing a new Parliament speaker and the nomination of a new prime minister is leading to more uncertainty about the fate of a financial rescue deal with the International Monetary Fund.