Banque Du Liban. (Credit: João Sousa/L'Orient Today)
BEIRUT — Banque du Liban (BDL) announced on Friday that it extended for a ninth time Circular 161, a measure aimed at narrowing the gap between the parallel market exchange rate and that of the central bank’s Sayrafa rate.
The announcement comes after caretaker Finance Minister and former BDL executive Youssef Khalil told Reuters on Wednesday that the country’s official exchange rate would change, starting in November, from the longstanding rate of LL1,507.5 per dollar to LL15,000.
This new exchange rate raises doubts over how Circular 161 and other similar measures, which employ a variety of different rates, will be applied in the coming months.
Adopted in December, Circular 161 allows banks to sell dollars to depositors at the so-called “Sayrafa” exchange rate as an exception to certain banking restrictions in place, and has been repeatedly renewed by the central bank since.
It remains unclear how the Sayrafa rate, which lets bank customers buy dollars at a rate lower than that of the parallel market, would continue to be utilized amid the newly announced official exchange rate.
The Sayrafa rate is always lower than the parallel market rate, though it changes according to fluctuations in that market. It was last set at LL29,800 to the dollar on Thursday evening, while the parallel market rate hovered around LL38,000.
The dollars exchanged by the bank to their customers are provided by BDL at the Sayrafa rate. They are drawn from the country's foreign exchange reserves, whose exact level is not known but which are quickly melting.
Friday’s Circular 161 extension comes as the official exchange rate, set at LL1,507.5 to the dollar since 1997, will change to LL15,000 — which matches neither the Sayrafa nor the parallel market rates.
The new official exchange rate also casts doubt over the earlier Circular 151, a mechanism put in place by BDL in April 2020 to mitigate the effect of illegal banking restrictions.
Circular 151 allows the withdrawal of restricted dollars, known as "Lebanese dollars" or "lollars" at a rate higher than LL1,507.5, set at LL8,000 since last December. This circular, extended for the fifth time last June, is still in force until the end of this year. It is not clear how the newly announced LL15,000 exchange rate will affect this mechanism.
The future of the rate of Circular 158, in force since June 2021, is also unclear. This measure, also implemented by the BDL, allows depositors to withdraw $400 in cash and the equivalent amount in liras at a rate of LL12,000 to the dollar from their restricted accounts each month.